Buying a ₹15 lakh bag? You now owe taxman ₹15,000 too. New TCS rules explained

From January 1, 2025, your high-end indulgences will come with a tax twist. Whether you're buying a ₹12 lakh wristwatch, a collector’s sculpture, or even a polo horse, the government wants to know—and collect.

Under Section 206C(1F) of the Income Tax Act, the Central Board of Direct Taxes (CBDT) has expanded the scope of Tax Collected at Source (TCS) to ten categories of luxury goods if the invoice value crosses ₹10 lakh in a single transaction.

The seller will now collect an additional 1% of the sale value at the time of purchase and deposit it with the government under your PAN.

The list of goods reads like a billionaire’s wishlist: luxury watches, art pieces, collectibles, yachts, boats, helicopters, designer sunglasses, handbags, shoes, high-end sports gear, home theatre systems—and even horses used for racing or polo.

Buy a designer handbag worth ₹15 lakh, and you’ll pay ₹15,15,000—₹15,000 of which will be TCS. The seller deposits this amount to the government and provides you with a Form 27D TCS certificate. The good news? You can claim this amount back while filing your income tax return—just like TDS.

The move is reportedly about widening the tax net and keeping track of big spenders. It targets high-value discretionary purchases. 

Earlier, TCS applied only to the purchase of motor vehicles over ₹10 lakh.

Sellers must collect and deposit TCS by the 7th of the following month, issue the buyer a TCS certificate, and file quarterly returns in Form 27EQ.

Bottom line: If you’re planning to splurge post-New Year, add 1% to your luxury budget. That statement watch or limited-edition art piece now comes with a little something extra—an invisible trail to the tax department.