Luxury products such as watches, handbags, and high-end televisions are set to get costlier with the government proposing to levy 1% tax collected at source (TCS) on notified goods of value priced at more than ₹10 lakh. The tax is, however, unlikely to dent demand as these products are largely bought by well-heeled consumers, according to retailers and market experts.
Noting that there has been a surge in spending on luxury items by high-net-worth individuals, the government said the step has been taken for properly tracking such high-value expenses, and to widen and deepen the tax net. The amendment will take effect from January 1.
Viraal Rajan, owner and director of Time Avenue, which retails uber luxury watches of brands such as Rolex and Chopard, said a TCS of 1% won’t impact sales. “Luxury is booming in the country. I don’t think affluent consumers spending on a luxury watch priced at ₹10 lakh would be uncomfortable paying a TCS of 1%,” he said.
“Affluent households will continue to buy luxury products,” said Anand Ramanathan, partner, consumer products and retail head at Deloitte India.
Companies such as LG and Samsung sell 8K televisions priced at more than ₹10 lakh in sizes like 75 inches and above, which will get more expensive with the tax proposal.
