Bought Luxury Goods: Paid TCS, How to claim credit:

Under New Income Tax Rules, Buying Luxury Items Worth Over Rs. 10 Lakh Now Includes 1% TDS

From April 22, 2025, buying luxury items that cost more than Rs. 10 lakh will include an extra 1% tax, called Tax Collected at Source (TCS).

This new rule, under Section 206C of the Income Tax Act, was announced by the Income Tax Department. It applies to high-cost items such as luxury handbags, expensive watches, designer shoes, and branded sportswear. This new rule was introduced in the Union Budget 2025 through the Finance Act to keep track of big purchases and grow tax collection. Now, sellers must collect 1% extra tax when selling these expensive items:

• Wristwatches
• Paintings, sculptures, antiques
• Collectable items like coins and stamps
• Yachts and helicopters
• Luxury handbags and sunglasses
• Designer footwear and high-end sportswear
• Home theatre systems
• Horses for racing or polo

The 1% tax will only be charged if the item costs more than Rs. 10 lakh. Example: If you buy something worth Rs. 30 lakh, the seller will collect Rs. 30,000 as extra tax (TCS) from you. One of the tax experts at Nangia Andersen LLP said this step will help the government keep better records of luxury purchases and promote clear and honest money tracking. In addition to his, he also mentioned that:

• Sellers must follow TCS rules carefully
• Buyers may have to go through extra ID checks and paperwork

How can TCS be claimed by buyers?

• The seller has to submit the 1% tax (TCS) using the buyer’s PAN number. This tax will show up in your Form 26AS.
• When you file your Income Tax Return (ITR), you can use this tax as a credit (like a balance already paid).
• If your total tax is less than the TCS collected, you’ll get a refund.
• It works just like TDS on your salary, where the tax taken in advance is adjusted when you file your return.