New TCS Rules in Effect from April 22: 20% Tax Without PAN on Luxury Purchases Above ₹10 Lakh

In a significant policy update aimed at curbing tax evasion and promoting financial transparency, the Indian government has implemented revised Tax Collected at Source (TCS) rules effective from April 22, 2025. As per the new guidelines, buyers who fail to furnish their Permanent Account Number (PAN) will now be subject to 20% TCS, up from the previous 2%. This sharp increase is expected to have a major impact on high-value purchases in the luxury segment.

What Is Covered Under the New TCS Rule?

The new TCS provisions are applicable to a specific list of luxury goods where the transaction value exceeds ₹10 lakh. The goods included in the notification are:

• Wrist watches

• Art pieces, paintings, sculptures

• Coins and stamps

• Yachts, helicopters, and boats (including rowing boats and canoes)

• Sunglasses, handbags, purses, shoes

• Sports gear such as golf kits, ski equipment

• Home theater systems

• Racing and polo horses

These items have been classified under luxury or high-end discretionary spending, and purchases beyond the ₹10 lakh threshold will now invite 20% TCS if the buyer fails to provide a valid PAN.

Government’s Objective: Transparency, Not Revenue

The primary goal of the revised TCS policy is not to boost revenue collection, but to enhance income traceability, discourage under-reporting, and prevent tax evasion. The government is focusing on promoting compliance among high-spending individuals who may be indulging in lavish lifestyles without proper disclosure of income sources.

A senior official clarified, “The intent is to ensure that large transactions, especially involving luxury items, are transparent and can be linked to the buyer’s tax profile. This is part of a broader effort to curb undisclosed wealth.”

A Word of Caution for High-Spenders

If you are considering purchasing luxury goods listed under the new rule, do not forget to provide your PAN at the time of purchase. Failing to do so will result in a steep 20% TCS charge, which, for instance, translates to ₹2 lakh tax on a ₹10 lakh purchase.

Providing your PAN ensures that the transaction is correctly reported and linked to your income tax records, which can help avoid future scrutiny and penalties.