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Informist, Wednesday, Apr. 23, 2025

 

NEW DELHI – The Central Board of Direct Taxes has notified luxury goods for which buyers will now have to pay 1% tax collected at source when the value of goods purchased is over INR 1 million. The list includes wristwatches, sunglasses, handbags and purses, shoes, art pieces like antiques, paintings, sculptures, collectables like coins, stamps, travel goods like yachts, rowing boats, canoes, and helicopters. The list also includes sportswear and equipment such as golf kit and ski wear, any home theatre system, and the purchase of horses for horse racing and polo. 

 

Informist had reported in February that the government was planning to keep watches, bags, and shoes on the list, as luxury items such as these help identify the spending potential of taxpayers. The 1% tax collected at source on these items is effective from Wednesday.  

 

In the full Budget for 2024-25 (Apr-Mar), the finance ministry had announced 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. CBDT Chairman Ravi Agrawal had told Informist in an interview that the government will revise the list of luxury items attracting this tax from time to time.

 

Over the last few years, the government 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 has projected gross tax collections at INR 42.70 trillion, 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 due to tax changes announced in the Budget.  End

 

Reported by Priyasmita Dutta

Edited by Avishek Dutta

 

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