TCS to be added on purchase of Luxury Goods under Section 206C(1F)
In an effort to widen the tax base and ensure better tracking of high-value transactions, the Central Government of India has exercised its powers under clause (ii) of sub-section (1F) of section 206C of the Income-tax Act, 1961, to notify a list of luxury and high-end goods that will now attract Tax Collected at Source (TCS) when their value exceeds ₹10 lakh per transaction.
Understanding Section 206C(1F) of the Income-tax Act
Section 206C of the Income-tax Act mandates certain sellers to collect tax at source from buyers at the time of sale of motor vehicle. Clause (1F) was particularly focuses on high-value transactions on the sale of motor vehicles. Under clause (ii) of sub-section (1F), the Central Government is empowered to specify additional goods to broden the scope of this TCS provision.
Key Highlights of the Notification
As per the latest notification, TCS will now be applicable on the sale of the following goods including on motor vehicle, provided the sale value exceeds ₹10 lakh:
| Sl. No. | Nature of Goods |
| 1 | Any wrist watch |
| 2 | Any art piece such as antiques, paintings, sculptures |
| 3 | Any collectibles such as coins, stamps |
| 4 | Any yacht, rowing boat, canoe, helicopter |
| 5 | Any pair of sunglasses |
| 6 | Any bag such as handbags, purses |
| 7 | Any pair of shoes |
| 8 | Any sportswear and equipment such as golf kits, ski-wear |
| 9 | Any home theatre system |
| 10 | Any horse for horse racing in race clubs and horse for polo |
Exceptions and Clarifications
- This rule applies only when the value of the goods exceeds ₹10 lakh per transaction.
- The provisions do not affect goods bought for resale or manufacturing purposes, as per existing TCS rules, but clarity may be issued in further circulars.
- The exact rate of TCS would be in line with other luxury goods under 206C(1F), which is typically 1%, unless notified otherwise.