New TCS Rules for High-Value Luxury Goods – Notification No. 36/2025-Income Tax

The Income Tax Department has issued Notification No. 36/2025 on 22nd April 2025, introducing important changes regarding Tax Collection at Source (TCS) on the purchase of certain high-value luxury goods. These changes are effective immediately from the date of publication in the Official Gazette.

Let’s understand what the notification says and its implications for buyers and sellers.

What Does the Notification Say?

Under the powers given by Section 206C(1F) of the Income-tax Act, 1961, the Central Government has now mandated TCS on the sale of the following luxury goods, where the value exceeds ₹10 lakh:

S. No.	Nature of Goods
1	Wrist watches
2	Art pieces such as antiques, paintings, sculptures
3	Collectibles like coins, stamps
4	Yachts, rowing boats, canoes, helicopters
5	Sunglasses
6	Bags like handbags, purses
7	Pairs of shoes
8	Sportswear and equipment such as golf kits, ski-wear
9	Home theatre systems
10	Horses for horse racing and polo

👉 TCS will apply only if the purchase value of any of these goods exceeds ₹10 lakh.

Why This Change?

This move aims to:
– Widen the tax base by tracking high-value luxury spending.
– Prevent tax evasion by collecting tax at the time of sale itself.
– Encourage reporting of large transactions involving luxury goods.

By collecting TCS upfront, the government ensures greater transparency in the purchase of expensive items.

Who Needs to Collect TCS?

– Sellers dealing in the above luxury goods must collect TCS from the buyer at the time of sale if the transaction value exceeds ₹10 lakh.
– The TCS collected must be deposited with the government and reported appropriately in TCS returns.

Note: Buyers can claim the TCS amount as a credit while filing their Income Tax Return (ITR).

Practical Impact on Buyers and Sellers

– For Buyers: The cost of buying luxury goods will temporarily increase due to TCS. However, it can be claimed back when filing the income tax return.
– For Sellers: Businesses dealing in luxury items must update their billing software, educate their sales team, and ensure timely TCS compliance to avoid penalties.

Conclusion

With this new notification, luxury transactions come under tighter scrutiny. If you are a seller of any of the notified goods, it’s important to start collecting TCS immediately.
And if you are a buyer planning a high-end purchase, ensure you receive proper TCS documentation to claim credit later.

Stay compliant, stay informed!