New Delhi: Purchase of luxury handbags, wrist watches, footwear and sportswear, priced above ₹10 lakh, will now attract 1 per cent tax collected at source (TCS). The CBDT has notified the items in the provision, introduced in the July budget, which makes collection of 1 per cent tax mandatory for purchases including sunglasses, collectibles such as coins, stamps and antiques, yacht, sportswear, including golf kits and ski-wear, and horses used for racing and polo, among others.
The new provision, effective immediately, aims to curb the use of black money in luxury goods items, promote transparency and improve regulatory oversight, an official said.
“Tracking high-value luxury purchases remains a challenge as the market remains opaque, with ‘price at request’ tag masking the real value,” a senior tax official said.
The official added that sometimes purchases were made using crypto or cash, making tracking difficult. “With TCS, it will now be able to track transactions,” the official said.
Experts say this will strengthen the audit trail in the luxury goods segment.
“Sellers will now be required to ensure timely compliance with TCS provisions, while buyers of notified luxury goods may experience enhanced KYC (know your customer) requirements and documentation at the time of purchase,” said Sandeep Jhunjhunwala, tax partner at Nangia Andersen LLP.
