Date of Notification: 22nd April 2025
Effective Date: 22nd April 2025
Issued by: Ministry of Finance, Department of Revenue, Central Board of Direct Taxes (CBDT)
Key Highlights of the Amendment
Under the amended Section 206C(1F) of the Income-tax Act, 1961, effective from 1st January 2025, the scope of Tax Collection at Source (TCS) has been significantly widened.
What Has Changed?
Earlier, Section 206C(1F) dealt only with the sale of motor vehicles exceeding ₹10 lakh, where the seller was required to collect 1% of the sale amount as TCS.
Now, from 1st January 2025, the amended provision includes other high-value goods, as notified by the Central Government, in addition to motor vehicles.
New Provision (Substituted Section 206C(1F)):
“Every person, being a seller, who receives any amount as consideration for sale of—
(i) a motor vehicle; or
(ii) any other goods, as may be specified by the Central Government by notification in the Official Gazette,of the value exceeding ₹10 lakh, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 1% of the sale consideration as income-tax.”
Goods Now Notified for TCS under Section 206C(1F)
As per the CBDT notification dated 22nd April 2025 (G.S.R. 252(E)), the following goods have been notified for applicability of TCS:
| Nature of Goods | Rule Code | Category Code |
|---|---|---|
| Wrist watches | 206C | MA |
| Art pieces (antiques, paintings, sculptures) | 206C | MB |
| Collectibles (coins, stamps) | 206C | MC |
| Yacht, Rowing boat, Canoe, Helicopter | 206C | MD |
| Sunglasses | 206C | ME |
| Bags (handbags, purses) | 206C | MF |
| Shoes (pair) | 206C | MG |
| Sportswear and Equipment (e.g., golf kits, ski-wear) | 206C | MH |
| Home theatre systems | 206C | MI |
| Horses for racing or polo | 206C | MJ |
These items, when sold with a consideration exceeding ₹10 lakh, will now attract 1% TCS under Section 206C(1F).
Impact on Sellers and Buyers
For Sellers:
- Must collect 1% TCS at the time of receiving payment.
- Applicable only if the sale consideration exceeds ₹10 lakh.
- Required to file quarterly TCS returns in Form 27EQ and deposit the tax with the government.
For Buyers:
- Will pay 1% extra over and above the invoice value.
- Can claim credit for TCS while filing income tax return.
Examples of Application
- Wrist Watch Sale
Selling a luxury watch worth ₹12 lakh:
→ Seller must collect ₹12,000 (1%) as TCS. - Art Piece Sale
Painting sold for ₹25 lakh:
→ ₹25,000 must be collected as TCS. - Helicopter Sale
If a personal helicopter is sold for ₹3 crore:
→ ₹3 lakh must be collected as TCS.
Compliance Measures
- Sellers should update their billing and accounting systems.
- Proper classification under the notified categories is essential.
- Buyers should maintain records for TCS credit claims.
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