New GST for Luxury Items: High-End Goods and Applicable Rates
Quick Summary
- The GST rates for luxury items in India have been updated, with high-end cars and motorcycles now taxed at 40% without any compensation cess.
- Designer clothes and accessories have varying GST rates of 5% or 18%, while perfumes, deodorants, and premium watches are taxed at 18%.
- Jewellery, considered a luxury item, is taxed at a lower rate of 3%, as it is often seen as an investment.
- Hotel rooms costing more than ₹7,500 per night are subject to an 18% GST rate, categorizing them as luxury expenses.
- Businesses selling luxury goods must comply with GST regulations, including registration, issuing HSN-coded invoices, and separating luxury and non-luxury accounting.
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.
