Government imposed tax on these products including luxury handbags, watches, shoes – Cross Talk India

Now 1% TCS (tax collection on source) will have to be given on purchasing luxury products like expensive handbags, watches, shoes and sportswear worth more than ₹ 10 lakh. Previously, this rule was applicable to vehicles above just ₹ 10 lakh from January 1, 2025. The Income Tax Department has issued a new rule to impose 1% TCS on some more expensive things since 22 April, 2025.

What is TCS?

TCS means that when you buy these goods, the seller will charge 1% additional tax from you. When you fill your income tax return, you can accommodate this deposited money in your tax liability. The government does not earn much directly to the TCS, but this helps them to monitor big expenses, as PAN card has to be given information while buying.

These products will be taxed

The TCS rule on expensive things and vehicles of more than ₹ 10 lakh was brought in July 2024 through the Finance Act, 2024 last year. Now this rule will also apply to things like watches, artifacts like paintings, collectible items, boats, helicopters, expensive handbags, sunglasses, shoes, expensive sportswear and equipment, home theater system and racing or polo horses.

What will the government benefit

Sandeep Jhunjhunwala, tax expert of Nangia Anderson LLP, says that with this new rule, the government will be able to keep a more close watch on expensive expenses. This will improve auditing in the market of luxury goods. He believes that this step is part of the government’s major plan to increase tax base and bring financial transparency.

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