1% TCS on Luxury Goods Above Rs 10 Lakh: 2025 Rules

If you buy a notified luxury item and a single sale crosses Rs 10 lakh, the seller must collect 1% Tax Collected at Source (TCS) from you and deposit it against your PAN. This applies from 22 April 2025 under Section 206C(1F) of the Income-tax Act, read with CBDT Notification No. 36/2025. The TCS is not an extra tax you lose. It is an advance against your income-tax, and you claim it back when you file your ITR.

CBDT Notification No. 36/2025 lists the exact goods that attract this 1% TCS. The Rs 10 lakh figure is a trigger threshold for a single item, not a slab. Once a single item crosses it, the 1% is charged on the full sale value, not just the part above Rs 10 lakh.

If a product is not on this list, this particular TCS does not apply to it, however expensive it is.

Suppose Kashvi buys a wrist watch for Rs 15,00,000 from an authorised dealer.

1. The single item crosses the Rs 10 lakh trigger, so 1% TCS applies.
2. TCS is 1% of the full Rs 15,00,000, which is Rs 15,000. It is not 1% of the Rs 5 lakh above the threshold. So Kashvi pays Rs 15,15,000 in total.
3. The dealer deposits Rs 15,000 with the government against Kashvi's PAN and reports it in Form 27EQ. The dealer then issues Kashvi a Form 27D TCS certificate.
4. The Rs 15,000 shows up in Kashvi's Form 26AS and Annual Information Statement (AIS).
5. When Kashvi files her income-tax return, she claims the Rs 15,000 as a credit against her tax liability. If her total tax due is lower than her prepaid taxes, the excess comes back as a refund.

So the real cost of the TCS is zero for an honest taxpayer. It is only a cash-flow timing matter, paid now and adjusted or refunded at ITR time.

The seller collects the TCS. This is the dealer, showroom, gallery, boutique or auction house selling the notified item. The seller must collect 1% at the time of receiving the sale consideration, deposit it with the government, and file the quarterly TCS statement in Form 27EQ.

The buyer bears the 1% upfront as part of the bill. Because the tax is linked to your PAN, you must give your correct PAN to the seller. If you do not have a PAN, a higher TCS rate can apply, so always quote your PAN on a high-value purchase.

CBDT widened the reporting machinery for this through Notification No. 35/2025, which amended the Income-tax Rules and Form 27EQ so these luxury sales are tracked. Both notifications are dated 22 April 2025.

You do not file anything separately to recover the TCS. You claim it inside your normal income-tax return.

1. Collect your Form 27D TCS certificate from the seller as proof of the amount collected.
2. Before filing, open your Form 26AS and your AIS on the income-tax portal and check that the TCS amount appears against your PAN.
3. While filing your ITR, enter the TCS in the schedule for taxes paid (the TCS / prepaid taxes section). The portal usually pre-fills this from 26AS.
4. The TCS is then set off against your total tax liability for the year.
5. If your prepaid taxes (TDS, TCS and advance tax together) exceed your final tax, you get the balance back as a refund after your return is processed.

For context on how advance tax and prepaid credits fit into your overall tax for the year, see the guide to common income-tax deductions. To keep your own records and challenge any wrong demand, The RTI Playbook explains how to file precise, evidence-backed information requests with any public authority.

No. The Rs 10 lakh is only the trigger that decides whether TCS applies to that single item. Once the item crosses it, the 1% is charged on the entire sale value. On a Rs 15 lakh watch the TCS is Rs 15,000, not Rs 5,000. This is different from some other TCS provisions that tax only the excess.

It applies to a single item of a notified type. CBDT's own clarification says TCS is levied on the sale of a single item whose value exceeds ten lakh rupees. So one Rs 12 lakh painting attracts TCS, but two Rs 6 lakh paintings, each below the limit, would not, for this provision.

No. It is an advance tax collected in your name. You claim it as a credit in your ITR and adjust it against your tax due, and any excess is refunded. For a compliant taxpayer the only real effect is the timing of the cash, not the amount.

It is effective from 22 April 2025, the date CBDT Notification No. 36/2025 was published in the Official Gazette under Section 206C(1F). Purchases of notified goods above Rs 10 lakh made on or after that date are covered.

Wrist watches, art pieces such as antiques, paintings and sculptures, collectibles such as coins and stamps, yachts, rowing boats, canoes and helicopters, sunglasses, handbags and purses, shoes, sportswear and equipment such as golf kits and ski-wear, home-theatre systems, and horses used for racing or polo.

1. On any luxury purchase near or above Rs 10 lakh, always quote your correct PAN so the TCS lands in your name.
2. Ask the seller for the Form 27D TCS certificate and keep it with your bill.
3. Before you file your ITR, reconcile the TCS in your Form 26AS and AIS, then claim it in the prepaid-taxes section.
4. If the credit is missing or wrong, raise it with the seller first, and use a written information request to a public authority where needed. Start with the RTI Wiki home page for the right tools and templates.