The govt wants to track purchases of luxury goods by high net-worth individuals . The Budget has proposed to levy TCS ( tax collected at source ) of 1% on notified luxury goods whose value exceed Rs 10 lakh. The idea is to keep a tab on transactions that authorities may otherwise not be able to track.
"Govt wants to broaden the tax net and raise enquiries if any on such transactions," said Meyyappan Nagappan, partner, tax and impact finance at Trilegal. The move won't impact luxury goods sales as these are relatively "inelastic", said Anand Ramanathan, partner and consumer products & retail sector leader at Deloitte India. The starting price of Louis Vuitton bags in India, for instance, start at over Rs 1.
5 lakh. "Govt is working to track all spends over a certain amount on things like overseas travel, property and car purchases. It wants to use TCS to get these expenses into the formal economy," said Paresh Parekh, tax leader, consumer products and retail sector at EY India.
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