TCS on Luxury Goods & Collectibles: Everything You Need to Know

The Central Board of Direct Taxes (CBDT) has expanded the scope of Tax Collected at Source (TCS) under Section 206C(1F) of the Income-tax Act, 1961. Through a key amendment dated April 22, 2025, sellers of luxury goods and collectibles must now collect 1% TCS on sales exceeding Rs.10 lakh. This move aims to widen tax compliance beyond just motor vehicles, targeting discretionary high-value transactions.

Quick Overview of the Amendment

1. Effective Date: April 22, 2025
2. TCS Applicability: Sale of high-value luxury items where consideration exceeds Rs.10 lakh per transaction.
3. TCS Rate: 1% of the sale value.
4. Payment Point: TCS must be collected at the time of payment.

Sellers Must Now Collect TCS on Luxury Items

Under this expanded rule, sellers of high-value items like wristwatches, art pieces, antiques, collectible coins/stamps, yachts, and more must now collect 1% TCS at the time of payment. This move extends India's tax net further into luxury consumption, ensuring better tax tracking across industries beyond just high-end motor vehicles.

 List of New Items Covered and Their Codes

Luxury Item Category	TCS Code
Wrist watches	6C MA
Art pieces (antiques, paintings, sculptures)	6C MB
Collectibles (coins, stamps)	6C MC
Yachts, rowing boats, canoes, helicopters	6C MD
Sunglasses (pairs)	6C ME
Handbags, purses	6C MF
Shoes (designer/limited-edition)	6C MG
Sportswear/equipment (golf kit, ski-wear)	6C MH
Home theatre systems	6C MI
Race-club horses and polo horses	6C MJ

How Sellers and Buyers Should Prepare

For Sellers:

• System Updates: Integrate new TCS codes (6C MA–MJ) in billing and ERP systems to automate 1% TCS collection once the Rs.10 lakh threshold is crossed.
• Contract Revision: Update sales agreements and invoices to clearly mention TCS applicability.
• Collection Timing: Ensure TCS is collected at the time of payment itself, not at delivery.
• Filing Compliance: File Form 27EQ quarterly and issue Form 26EQ certificates to buyers promptly.
• Staff Training: Train finance, accounts, and IT teams about the operational changes.

For Buyers:

• TCS Credit Claim: TCS paid can be adjusted against final income tax payable by showing it in Form 26AS.
• Documentation: Keep invoices and TCS certificates safely for claiming tax credit during filing.
• Pricing Awareness: Remember, the 1% TCS is an advance tax, not an extra cost on the product's base price.

Compliance Importance: Any failure to collect, deposit, or report TCS can attract interest, penalties, and prosecution risk under Sections 201(1A) and 271C of the Income-tax Act.

Conclusion

The April 22, 2025 amendment to Form 27EQ and the expansion of TCS under Section 206C(1F) reflects India's focus on strengthening tax compliance in the luxury segment.
Sellers of high-value goods must swiftly adapt their systems, documentation, and compliance mechanisms. Buyers, too, must prepare for minor upfront TCS payments while ensuring correct tax credit during filing.

In India’s growing luxury and collectibles market, this structured tax approach will ensure transparency, fairness, and better revenue mobilization for the government while streamlining tax reporting for businesses and individuals alike.