In a move aimed at expanding the tax base and ensuring better traceability of high-value transactions, the Central Board of Direct Taxes (CBDT) has issued a notification amending the Income-tax Rules, 1962. The amendment, published as the Income-tax (11th Amendment) Rules, 2025, mandates the collection of tax at source (TCS) on the sale of several luxury and collectible items under Section 206C of the Income-tax Act, 1961.
According to the notification [G.S.R. 252(E)], TCS will now be applicable on the sale of the following items:
- Wrist watches
- Artworks including antiques, paintings, and sculptures
- Collectibles such as coins and stamps
- Luxury transport items like yachts, rowing boats, canoes, and helicopters
- Sunglasses and handbags/purses
- Branded footwear and sports kits including golf kits and ski-wear
- Home theatre systems
- Horses used for horse racing and polo
This amendment has been incorporated into Form 27EQ and is effective from the date of publication in the Official Gazette.
The move is seen as part of the government's broader strategy to tighten compliance and bring high-value discretionary spending into the tax net. Tax experts believe this measure will help the authorities monitor wealth better and reduce tax evasion in the luxury goods market.
Implications for Sellers and Buyers
Sellers of these specified goods will now be responsible for collecting tax at source from buyers at the applicable rate, which will be deposited with the income tax department. Buyers, in turn, should ensure proper TCS credits are reflected in their Form 26AS for hassle-free tax filings.
Background and Legal Authority
The notification was issued under the powers conferred by Section 295 read with Section 206C of the Income-tax Act, 1961. The rules were last amended by Notification G.S.R. 221(E) dated April 7, 2025.
For those dealing in luxury and collectible markets, this notification signals a significant compliance change, requiring system-level and operational readiness to ensure timely and accurate TCS filings.
Official copy of the notification is as follows
CAclubindia
