Understanding Luxury Tax in India under GST: What Every High-End Business Should Know

What is Luxury Tax?

Luxury tax refers to a charge on goods and services that are considered non-essential or indulgent — such as high-end accommodations, vehicles, and designer items.

How GST Replaced the Luxury Tax

Pre-GST Luxury Tax

States used to levy luxury tax on services like hotel stays and luxury events.

Post-GST Scenario

Now, high-end goods/services are taxed at 18% to 28% GST plus additional cess where applicable.

Key Sectors Affected by Luxury Tax Under GST

Luxury Hotels and Resorts

Tax Rate: 28% if room tariff is ₹7,500 and above

Luxury Cars

Tax Rate: 28% GST + 1–22% Cess

Banquet Halls and Events

18% GST on rental and services

Designer Goods & Jewelry

28% GST on premium products

Why is Luxury Tax Important?

It generates revenue, promotes fair taxation, and encourages responsible consumption.

How Businesses Can Stay Compliant

Proper classification under GST
Timely GST filings
Accurate cess calculation
Expert consultation

FAQs on Luxury Tax under GST

Is luxury tax still applicable in India?

No, it has been subsumed under GST.

What is the GST rate on luxury hotels?

28% for rooms priced at ₹7,500+ per night.

How much GST and cess on luxury cars?

28% GST + 1% to 22% cess.

Are high-end branded goods taxed higher?

Yes, generally at 28% GST.

Need Help With Luxury Tax & GST Compliance?

Contact Power of Factorial Business Solutions for registration, return filing, and end-to-end tax consultation.

📍 K R Puram, Bangalore
📞 +91 8105021287
📧 poweroffactorial024@gmail.com
🌐 www.poweroffactorial.in