New Delhi: A New Tax Era for Luxury Goods

In a bold move to expand the tax base, the Indian government has now placed a Tax Collected at Source (TCS) on a wide range of luxury items. This includes everything from wristwatches, handbags, and shoes to sunglasses, art pieces, paintings, and home theatre systems, all priced over Rs 10 lakh.

Expanding the Tax Net

The Central Board of Direct Taxes (CBDT) has identified 10 product categories for the new TCS provisions. Notably, horses for racing, yachts, helicopters, gold kits, and ski gear have also made the list. Buyers will now need to pay a 1% TCS at the time of purchase, mirroring the existing policy for cars over Rs 10 lakh.

Enhancing Income Disclosure

This initiative is part of a broader effort to encourage accurate income disclosure among businessmen and professionals, who often under-report earnings to evade taxes. The income tax department leverages purchase data to match tax returns, prompting taxpayers to rectify discrepancies through updated filings.

Tracking Luxury Spending

Amit Maheshwari of AKM Global highlights the move's significance: "This notification expands the scope of TCS to include luxury goods and collectibles... enhancing traceability of luxury spending." Effective immediately, this policy also aims to curb cash transactions in high-value purchases, including suspected smuggled goods like designer wear and watches.