Notification u/s 295 read with section 206C of the Income Tax Act, 1961

## Report on the Income-tax Eleventh Amendment Rules, 2025 **1. Executive Summary:** This report analyzes the Income-tax Eleventh Amendment Rules, 2025, as notified by the Central Board of Direct Taxes (CBDT) on April 22, 2025. This amendment modifies the Incometax Rules, 1962, specifically impacting Form No. 27EQ. The core purpose of the amendment is to introduce new categories for Collection at Source (TCS) on the sale of various items. Key findings include the expansion of TCS applicability to include wrist watches, art pieces, collectibles, yachts, sunglasses, bags, shoes, sportswear, home theatre systems, and horses for racing or polo. This will primarily affect sellers of these specified goods. **2. Introduction:** This report aims to provide a comprehensive overview of the Income-tax Eleventh Amendment Rules, 2025, based solely on the information provided in the official notification. The report focuses on the changes introduced by this amendment and their likely implications. **3. Policy Overview:** * **Original Policy Amended:** Incometax Rules, 1962 * **Core Objective(s):** The primary objective of the original policy is to establish and regulate the rules for income tax collection, as inferred from the fact that this amendment is to the Incometax Rules, 1962 and section 295 read with section 206C of the Income tax Act, 1961. The amendment seeks to expand the scope of Collection at Source (TCS). **4. Background and Rationale:** The amendment likely aims to broaden the tax base by including a wider range of goods under the TCS regime. The specific items added suggest a focus on luxury and discretionary spending, potentially targeting transactions that may have previously been under-reported or difficult to track. The amendment fixes a gap by adding rules for categories of goods not previously subject to TCS. **5. Key Provisions / Changes:** This amendment introduces new categories for Collection at Source (TCS) within Form No. 27EQ of the Incometax Rules, 1962. Specifically, the changes involve inserting new rows into the table under Note 11 of the Annexure to Form No. 27EQ. The *new* rule is the addition of the following items subject to TCS under section 206C: * Sale of wrist watch (Code: 6C MA) * Sale of art piece such as antiques, painting, sculpture (Code: 6C MB) * Sale of collectibles such as coin, stamp (Code: 6C MC) * Sale of yacht, rowing boat, canoe, helicopter (Code: 6C MD) * Sale of pair of sunglasses (Code: 6C ME) * Sale of bag such as handbag, purse (Code: 6C MF) * Sale of pair of shoes (Code: 6C MG) * Sale of sportswear and equipment such as golf kit, skiwear (Code: 6C MH) * Sale of home theatre system (Code: 6C MI) * Sale of horse for horse racing in race clubs and horse for polo (Code: 6C MJ) The *effect* of these changes is that sellers of these newly listed items will now be required to collect tax at source from buyers, and report these collections using the newly assigned codes within Form No. 27EQ. This will likely increase compliance burden on sellers of these goods, but also improves tax collection. **6. Target Audience and Stakeholders:** The primary target audience includes: * **Sellers of:** Wrist watches, art pieces (antiques, paintings, sculptures), collectibles (coins, stamps), yachts, rowing boats, canoes, helicopters, sunglasses, bags (handbags, purses), shoes, sportswear and equipment (golf kits, skiwear), home theatre systems, and horses for horse racing/polo. * **Buyers of:** The aforementioned goods, as they will be subject to TCS. * **Tax Professionals:** Responsible for assisting businesses with compliance related to TCS. **7. Implementation Aspects (Inferred):** * **Responsible Agency:** Central Board of Direct Taxes (CBDT) is responsible for implementing and overseeing these rules. * **Timelines:** The rules came into force on the date of their publication in the Official Gazette (April 22, 2025). * **Procedures:** Sellers of the specified goods will need to modify their systems to collect TCS at the point of sale. They will also need to incorporate the new codes (6C MA to 6C MJ) when filing Form No. 27EQ. The amendment necessitates updating accounting practices and software to accurately collect and remit TCS for these newly added categories. **8. Expected Outcomes / Impact of Changes:** The likely intended outcome of these changes is increased tax revenue through expanded TCS coverage. The amendment also aims to improve the tracking of transactions related to luxury and discretionary items, potentially reducing tax evasion. Sellers of these goods can expect a change in accounting and compliance burdens. **9. Conclusion:** The Income-tax Eleventh Amendment Rules, 2025, represent a significant expansion of the TCS regime. By including a wider range of goods, the amendment aims to enhance tax collection and improve the tracking of high-value transactions. Sellers of the newly listed goods must ensure they comply with the new TCS requirements to avoid penalties.

Key Entities Referenced