TDS & TCS in Budget 2025: What’s New?
March 29, 2025
The Central Board of Direct Taxes (CBDT) has introduced significant amendments to Form 27EQ under the Income-tax Act, expanding the scope of Tax Collected at Source (TCS) to include high-value luxury goods and collectibles. Effective from April 22, 2025, these changes, notified through Notification No. G.S.R. 252(E) dated April 22, 2025, aim to enhance tax compliance and curb tax evasion on high-value transactions. This blog explores the amendments, the new list of taxable goods, TCS rates, and their implications for businesses and buyers.
What is Form 27EQ and TCS?
Form 27EQ is a quarterly statement filed by businesses to report TCS collected under Section 206C of the Income-tax Act, 1961. TCS is a tax collected by sellers from buyers at the time of sale for specific goods or services, which is then deposited with the government. The recent amendment broadens the scope of TCS to include luxury items and collectibles, targeting high-value transactions to ensure proper tax reporting.
Key Amendments to Form 27EQ
The CBDT, through the Income-tax (Eleventh Amendment) Rules, 2025, has updated Form 27EQ, Annexure, Note 11, to include a new list of goods subject to TCS under Section 206C(1F). The amendment mandates TCS at a rate of 1% on the sale of specified luxury goods and collectibles exceeding a value of ₹10 lakh. These changes reflect the government’s intent to streamline tax collection and monitor high-value transactions.
New Goods Subject to TCS
The following table outlines the newly added goods liable for TCS, effective April 22, 2025:
| Goods on which TCS applies on sale of: | TCS Rate | Threshold Value |
| Wristwatch | 1% | ₹10 lakh |
| Art Pieces such as antiques, painting, sculpture | 1% | ₹10 lakh |
| Collectibles such as coin, stamp | 1% | ₹10 lakh |
| Yacht, Rowing boat, Canoe, helicopter | 1% | ₹10 lakh |
| Pair of sunglasses | 1% | ₹10 lakh |
| Handbag, purse | 1% | ₹10 lakh |
| Pair of shoes | 1% | ₹10 lakh |
| Sportswear and equipment such as golf kit, ski-wear | 1% | ₹10 lakh |
| Home theatre system | 1% | ₹10 lakh |
| Horse for horse racing in race clubs and horse for polo | 1% | ₹10 lakh |
TCS Applicability and Compliance
Who Collects TCS? Sellers of the listed goods with a sale value exceeding ₹10 lakh must collect TCS from buyers at the time of sale.
TCS Rate: A uniform rate of 1% applies to the transaction value. (At the time of receipt)
Form 27EQ Filing: Sellers must report TCS details in Form 27EQ, filed quarterly, with updated fields to accommodate the new goods.
Effective Date: The rules apply to transactions occurring on or after April 22, 2025.
Why the Amendment?
The inclusion of luxury goods and collectibles under TCS aims to:
– Curb Tax Evasion: High-value transactions often go unreported. TCS ensures these are tracked and taxed.
– Boost Revenue: Collecting tax at the source provides the government with advance revenue, improving cash flow for public expenditure.
– Enhance Compliance: The amendment aligns with the Union Budget 2025’s focus on simplifying TCS provisions and increasing transparency.
Implications for Businesses and Buyers
For Businesses
1. Compliance Burden: Sellers must update their accounting systems to track TCS on the new goods and ensure timely filing of Form 27EQ.
2. Customer Communication: Businesses need to inform buyers about the 1% TCS, which may affect pricing strategies.
3. Audit Preparedness: Accurate reporting in Form 27EQ is critical to avoid penalties during tax audits.
For Buyers
1. Increased Costs: Buyers of luxury goods will face an additional 1% TCS, increasing the overall cost of high-value purchases.
2. Tax Credit: The TCS amount can be claimed as a credit when filing Income Tax Returns (ITR), reducing the final tax liability.
3. Awareness: Buyers must verify that sellers issue TCS certificates for proper documentation.
How to Comply with the New TCS Rules
To ensure seamless compliance, businesses should:
– Update Systems: Modify billing and accounting software to calculate and record TCS on transactions above ₹10 lakh.
– Train Staff: Educate sales and finance teams about the new TCS requirements.
– File Form 27EQ Accurately: Use the updated Form 27EQ format to report TCS, ensuring all new goods are correctly categorized.
– Maintain Records: Keep detailed records of transactions and TCS certificates issued to buyers.
Conclusion
The CBDT’s revision of Form 27EQ marks a significant step toward strengthening tax compliance for high-value transactions. By including luxury goods and collectibles under TCS, the government aims to enhance transparency and revenue collection. Businesses and buyers must adapt to these changes by updating systems, understanding compliance requirements, and leveraging TCS credits effectively. Stay informed about CBDT notifications to navigate the evolving tax landscape with confidence.
For more details, refer to the official CBDT Notification No. G.S.R. 252(E) on the Income Tax India website
You may find our other blogs below:
Who should file an Income Tax Return (ITR)?: Click here
Old Tax Regime vs New Tax Regime: Click here
Budget 2025 Direct and Indirect Changes: Click here
