TCS on Luxury Purchases: What Indian Buyers Must Know in FY 2025-26
The Income Tax Department has widened the tax net with Tax Collected at Source (TCS) now covering more high-value transactions. From luxury foreign tours to expensive jewellery and cars, Indian taxpayers need to factor in TCS while making big purchases.
Let’s break down what’s changed in FY 2025-26 and how it impacts your spending.
What is TCS on Luxury Purchases?
TCS is a tax the seller collects from the buyer at the time of purchase and deposits it with the Income Tax Department. It applies to transactions involving high-value goods or services.
When is TCS Applicable in FY 2025-26?
| Nature of Transaction | Threshold Amount | TCS Rate | Section/Notification |
|---|---|---|---|
| Purchase of motor vehicle | Above ₹10 lakh | 1% | Section 206C(1F), Income-tax Act |
| Foreign remittance under LRS (non-education/medical) | Above ₹7 lakh per FY | 20% (if PAN not given) | Section 206C(1G) |
| Foreign tour package | Any amount | 5% (with PAN), 20% (without PAN) | Section 206C(1G) |
| Sale of overseas tour program package | Any amount | 5% | Section 206C(1G) |
| Jewellery, white goods, paintings, etc. | Above ₹50 lakh (by seller) | 0.1% | Section 206C(1H) |
How to Claim TCS in ITR
- Check your Form 26AS or AIS for TCS entries.
- File your ITR and adjust TCS against your final tax.
- If excess, claim refund.
TCS is not a penalty—it’s your money, just parked with the tax department.
Legal Backing and Budget Update
- Finance Act, 2023 and 2024 introduced tighter controls under Section 206C(1G) for foreign tour and remittance.
- As per CBDT Circular No. 10 of 2023, overseas tour program includes hotels, flights, and other bundled services.
- Latest Economic Times report confirms that luxury transactions are now on CBDT’s radar with enhanced scrutiny and AIS/TIS data tracking.