EXCLUSIVE
Govt may soon issue list of luxury goods that will attract 1% tax at source
This story was originally published at 16:03 IST on 4 February 2025
Register to read our real-time news.Informist, Tuesday, Feb. 4, 2025
By Sagar Sen and Priyasmita Dutta
NEW DELHI – Luxury goods buyers will have to prepare themselves for 1% tax collected at source on the value of goods purchased over INR 1 million as the government readies the list of items that will attract the tax. The government is currently finalising the items and the list will be issued by March, so that the tax can be levied from Apr. 1, a senior finance ministry official said on Tuesday.
The list is likely to include cars, watches, bags, and shoes among a host of such products, the official told Informist. While the government will issue a notification detailing these goods, the Central Board of Direct Taxes is empowered to update the list from time to time, the official said.
In the full Budget for the financial year 2024-25 (Apr-Mar), the finance ministry had announced the 1% tax collected at source on goods valued at more than INR 1 million. The move was aimed at keeping track of spending by high-income taxpayers to check if there were mismatches in income disclosed and tax paid.
The government, over the last few years, has been focusing on plugging loopholes in the system using technology to ensure that no revenue is forgone. This has led to better income tax collections, the government has said.
The Budget for FY26, presented by Finance Minister Nirmala Sitharaman on Saturday, projected gross tax collections of INR 42.70 trillion for the next financial year starting April, up 10.8% from the revised estimate of INR 38.53 trillion for FY25. Of the total tax collections in FY26, the government aims to collect INR 14.38 trillion from income tax, up 14.4% on year despite forgoing INR 1 trillion through tax changes announced in the Budget. End
Edited by Rajeev Pai
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