1% TCS on Luxury Goods: Complete List of Goods Above 10 Lakhs Subject to Tax

India’s luxury retail market is currently valued at $8 billion and is expected to grow to $32 billion by 2032. India’s high-net-worth individual (HNWI) population is estimated to be 85,698 in 2024 and is expected to rise to 93,753 by 2028. India’s long-term economic growth, environment, and increasing investment opportunities have made it a must-visit destination for global luxury brands. The Finance Ministry recently announced certain luxury items in the ambit of TCS (Tax Collected At Source), effective from  22 April 2025. Here, we will learn more about TCS on luxury goods, recent announcements and its impact on buyers.

What is TCS on Luxury Goods?

Before explaining TCS about luxury goods, we will briefly describe TCS. Tax Collected at Source, comes under Section 206C of the Income Tax Act 1961. It is the tax the seller collects from the buyer at the time of sale. Earlier, it applied only to motor vehicles with a sale value exceeding Rs. 10 lakh. But now it applies to a specific list of luxury goods whose sale consideration exceeds Rs. 10 lakh. The rate of TCS is 1% of the sale consideration for the luxury goods hereafter mentioned.

Why TCS on Luxury Goods?

The government's motive behind applying Tax Collected at Source (TCS) on luxury goods purchases exceeding Rs. 10 lakh is to monitor high-value transactions. This allows the government to verify individuals' spending and income. If any discrepancy is found in spending and income, it will create a red flag for the taxpayer. Therefore, TCS on luxury goods will help prevent tax evasion and money laundering.

Who is Liable to Collect and Pay TCS?

Buyer 

Buyer is any person who purchases goods, but does not include:

• The Central government, the State government, an embassy, a high commission, a legation, a commission, a consulate and the trade representative of a foreign state
• A local authority
• A person importing goods into India

Seller

The seller is the person who is liable for collecting TCS and paying it to the government.

Applicability and Threshold

TCS on luxury goods applies to all goods mentioned in the table below. The threshold limit for collecting TCS on luxury goods is Rs. 10 lakh.

List of Luxury Goods Subject to 1% TCS

The following luxury goods are subject to TCS at the rate of 1% if the sale consideration of the below-mentioned goods exceeds Rs. 10 lakh:

Compliance Requirement by Seller

• Collection of TCS: The seller must collect TCS at 1% on the sale of the above-mentioned luxury goods exceeding Rs. 1 lakh and deposit it to the government within the due dates. He must have a TAN (Tax Dedication and Collection Account Number)  to be eligible for collecting TCS. The due date for payment to the government is within 7 days from the end of the month in which TCS is collected.
• Documentation: The seller must record all sales transactions of luxury goods exceeding Rs. 10 lakh, including the buyer’s information, the goods’ information, date of transaction and the invoice amount.
• Reporting: The seller must file the TCS return, Form 27EQ, against the buyer's PAN details within the due dates. The due dates are 15 July (for the Quarter ending June), 15 October (for the Quarter ending September), 15 January (for the quarter ending December), and 15 April (for the Quarter ending March).          

Failure to submit the TCS return within the due dates draws a penalty of Rs. 200 per day for every day of default. If a collector fails to furnish the TCS return within the due dates or correct information, he is liable to pay a minimum penalty of Rs. 10,000, which can go up to Rs. 1,00,000.

The seller must generate Form 27D, a TCS certificate for the buyer, within 15 days of filing the TCS return.

Impact on Luxury Goods Markets

TCS won’t incur any additional cost to buyers. It is a form of advance tax that buyers pay and can get a refund for when filing their Income Tax Return. TCS on luxury goods won’t significantly impact their pockets. Buyers must pay 1% of the sale consideration on luxury goods exceeding Rs. 10 lakh, which is not a considerable value. They can claim a TCS refund while filing their ITR. However, the individuals who do not file their ITR will not be eligible to claim their TCS refund.

How to Claim TCS?

Buyers can claim a TCS refund while filing their ITR. They need to keep a record of Form 27D, a certificate provided by the seller. The steps involved in the process of claiming TCS refunds are as follows:

Step 1: Before filing your ITR, gather all the certificates issued by the seller where your TCS is collected. These include Form 27D, PAN details, TAN details of the collector, TCS amount paid, and the collection date. If you don’t have Form 27D, you can download it from the TRACES portal or request it from the seller.

Step 2: Log in to the Income Tax portal and verify the details in Form 26AS as reflected in Form 27D.

Step 3: Calculate your tax liability. If the total tax liability for the financial year is more than the TCS amount paid to the government by the seller, then the TCS amount will be offset against the total tax liability and if the total tax liability is less than the TCS amount paid to the government, then you are eligible to receive a refund of the TCS amount in your PAN-linked bank account.

Step 4: File the ITR for the financial year.

Step 5: Review the tax summary to verify the amount of TCS refund.