From Motor Vehicles to Luxury Goods: Expansion of TCS u/s 206C(1F)

Last updated: 31 January 2026

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Quick Summary

The Indian government has expanded Section 206C(1F) of the Income-tax Act to include Tax Collected at Source (TCS) on specified luxury goods sold for over Rs. 10 lakh. This change, effective from 22nd April 2025, aims to broaden the tax base and monitor high-value spending. Sellers of items like luxury watches, art, yachts, and high-end bags must now collect TCS at 1% on sales exceeding the threshold, with buyers able to claim this amount back when filing their tax returns.

To widen the tax base and track high-value consumption, the CBDT (via notification No. 36/2025) has expanded Section 206C(1F) to cover Tax Collected at Source (TCS) on the sale of specified luxury goods, effective from 22nd April, 2025.

This provision is particularly important for dealers, manufacturers, importers, and sellers of high-end goods, as non-compliance attracts interest and penalties.

TCS on Luxury Goods: Section 206C(1F) Explained

What is Section 206C(1F)?

Section 206C(1F) of the Income-tax Act, 1961 provides for the collection of tax at source (TCS) by the seller at the time of receipt of consideration for sale of motor vehicles and notified luxury goods where the value exceeds Rs. 10,00,000.

List of Luxury Goods Covered

As notified by the Government, luxury goods include:

Wrist watches
Art pieces, antiques, sculptures
Collectibles (coins, stamps, etc.)
Yachts, rowing boats, canoes
Helicopters
Sunglasses
Bags such as handbags & purses
Shoes
Sportswear and equipment
Home theatre systems
Horses for racing or polo

Important: The list is not exhaustive and may be expanded through notification.

Who is the Buyer here?

Any person purchasing luxury goods except:

Central / State Government
Embassy, High Commission
Consulate or Trade Representation
Local authority
Public Sector Companies (engaged in passenger transport)

Let's understand this with an example:

A luxury watch dealer sells a wristwatch for Rs 12,00,000.

Sale value: Rs 12,00,000
TCS @1%: Rs 12,000 (since the value exceeds Rs.10 lakh)
Total amount collected: Rs 12,12,000

The buyer can later claim Rs 12,000 as credit in the Income Tax Return.

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

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3 Years PLAN

4999

(Excl. of GST ₹899)

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About the Author

CA KAJAL AGRAWAL

CA In Practice

Chartered Accountant in practice with growing exposure in taxation, audits and compliance. Passionate about professional writing and continuous learning in the evolving tax landscape.

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