Will Your Luxury Watch Get More Expensive? Understanding the New 1% TCS On Luxury Purchases In India
2 min read
As of April 22, 2025, the Income Tax Department has expanded the scope of Tax Collected at Source (TCS) to cover a broader range of luxury goods, including wristwatches priced above ₹10 lakh. This new rule brings added transparency to high-value transactions and is part of a larger initiative to widen the tax base and enhance income traceability. But does this mean your next watch will cost more? Not necessarily. Here's what you need to know:
What’s Changed?
- 1% TCS Now Applies: If you're purchasing a luxury timepiece over ₹10 lakh, retailers will now collect a 1% TCS at the time of billing.
- Linked to Your PAN: The TCS is linked to your Permanent Account Number (PAN), so it's seamlessly integrated with your tax records.
- Visible in Your Form 26AS: The collected amount will reflect in your Form 26AS—your tax credit statement—making it easier to claim during ITR filing.
- Refundable if No Tax Liability: If you don't have a tax liability, this amount will be refunded when you file your income tax return.
- 20% Penalty: Non compliance will attract 20% penalty making anonymity costly.
What Should Buyers Keep in Mind?
• Updated PAN Details: Ensure your PAN is correct and up to date with the seller at the time of purchase.
• Enhanced KYC: Luxury retailers may now ask for additional KYC documents a small step toward secure, verified purchases.
• Request a Breakdown: Ask for an itemised invoice showing the TCS component, so you have clear records for tax purposes.
• Keep Your Receipts: Always retain purchase receipts as part of your financial documentation for future filings.
The Bottom Line
The introduction of TCS on luxury watches doesn’t increase the intrinsic price of the watch it simply adds a trackable layer to the transaction, with refundable benefits during your income tax filing. Think of it as a way the system is evolving to better reflect high-value discretionary spending, while offering buyers more visibility and control over their tax credits.
