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:

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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.