New GST for Luxury Items: High-End Goods and Applicable Rates
Luxury goods—from designer bags to high-end cars—come with a premium price tag, and so does their tax. Under the Goods and Services Tax system, luxury products attract higher tax rates to balance affordability with indulgence. Let’s explore the gst for luxury items, their classification, and how it impacts buyers and businesses.
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New GST Rate on Luxury Items in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for select luxury items (no compensation cess).
Luxury Items New GST Rate
Here’s a table of some common luxury goods and their applicable GST rates:
| Luxury Item | HSN Code | New GST Rate | Compensation Cess |
|---|---|---|---|
| High-end cars (above 1500cc) | 8703 | 40% | None |
| Luxury motorcycles (above 350cc) | 8711 | 40% | None |
| Designer clothes/accessories | Varies | 5% or 18% | None |
| Perfumes and deodorants | 3303 | 18% | None |
| Premium watches | 9102 | 18% | None |
| Jewellery (gold/diamond) | 7113 | 3% | None |
| Yachts, private aircraft | 8903, 8802 | 40% | None |
| Hotel rooms above ₹7,500/night | 9963 | 18% | None |
Note: The 40% slab replaces the earlier 28%+cess for a narrow set of luxury/sin items (e.g., big cars, >350cc bikes, yachts, private aircraft). Where your Appendix doesn’t explicitly list an item (e.g., “designer apparel”), the slab follows its underlying HSN (generally 5% or 18%); adjust per Appendix if specified.
What Are Considered Luxury Items Under GST?
Luxury items are goods that go beyond basic necessity and are usually associated with status, style, or enhanced comfort. They include:
- High-end automobiles
- Designer clothing and handbags
- Perfumes and cosmetics
- Premium watches and jewellery
- Yachts and private jets
- Air-conditioned restaurants and hotels
These items are subject to higher GST rates and sometimes additional cess charges.
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Old Luxury Items GST Rate
(Old GST Rates – Applicable Until 21st September)
Here’s a table of some common luxury goods and their applicable GST rates:
| Luxury Item | HSN Code | GST Rate | Compensation Cess |
|---|---|---|---|
| High-end cars (above 1500cc) | 8703 | 28% | 15% to 22% |
| Luxury motorcycles (above 350cc) | 8711 | 28% | 3% to 15% |
| Designer clothes/accessories | Varies | 12%–18% | None |
| Perfumes and deodorants | 3303 | 18% | None |
| Premium watches | 9102 | 18% | None |
| Jewellery (gold/diamond) | 7113 | 3% | None |
| Yachts, private aircraft | 8903, 8802 | 28% | 3% to 15% |
| Hotel rooms above ₹7,500/night | 9963 | 18% | None |
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GST on Luxury Items in India: Key Insights
- The gst on luxury items in india is structured to make premium goods contribute more to the exchequer.
- Goods classified as luxury essentials (like cosmetics and high-end electronics) may fall in the 18% bracket.
- Jewellery, although considered luxury, is taxed at only 3% since it’s treated as an investment.
Impact on Buyers
- Buyers of luxury cars or services pay GST + Cess, raising the total cost by 35%–50%.
- Retail prices include GST; service invoices show GST separately.
GST Compliance for Luxury Retailers
- GST registration is mandatory due to high-value transactions
- Issue HSN-coded GST invoices
- Maintain separate accounting for luxury and non-luxury segments
- Claim Input Tax Credit on office decor, ads, and service expenses
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Conclusion
Understanding the gst for luxury items helps buyers estimate final prices and allows businesses to stay compliant with proper classification and billing.
Jagdish Prasad is a Chartered Accountant with over 5 years of experience. He helps people and businesses with GST, income tax, and HSN codes. Jagdish makes sure his clients follow all tax rules and save money the right way. He also enjoys writing simple articles to help others understand taxes and stay updated with the latest rules.
Frequently Asked Questions (FAQs)
- What is the GST rate for luxury cars in India?Luxury cars attract 28% GST + 15%–22% compensation cess depending on engine capacity.
- Is jewellery considered a luxury item under GST?Yes, but it is taxed at a lower rate—only 3% GST, with no additional cess.
- What is the GST on luxury items in India for perfumes and watches?Perfumes and watches are taxed at 18% GST without any cess.
- Are hotel stays taxed as luxury items?Yes, if the room tariff exceeds ₹7,500/night, it attracts 18% GST.
- Can businesses selling luxury goods claim Input Tax Credit?Yes. If registered under GST, businesses can claim ITC on applicable inputs used for business operations.
