Luxury Goods Tax: A New Chapter in Financial Oversight

From April 2025, luxury goods sold above Rs 10 lakh in India will incur a 1% Tax Collected at Source. This move is part of the 2024 Finance Act aimed at better tracking of high-value expenditures. Sellers must ensure compliance, marking a shift towards greater financial transparency.

India is set to impose a 1% Tax Collected at Source (TCS) on luxury goods priced above Rs 10 lakh, starting from April 2025. This initiative is part of the 2024 Finance Act announced in July, targeting enhanced scrutiny of discretionary spending on high-value items.

The tax will apply to an array of high-end goods including handbags, wrist watches, and even yachts. Sellers are tasked with collecting this tax, which aims at broadening the tax base and fortifying the audit trail within the luxury market segment.

Sandeep Jhunjhunwala of Nangia Andersen LLP asserts that while this policy may present challenges for the luxury sector, it underscores the government's commitment to promoting financial transparency and regulatory oversight.

(With inputs from agencies.)