CA KAJAL AGRAWAL
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.
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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