--- title: "New GST for Luxury Items 2026: 40% Rate on Luxury Goods, Products" description: "New GST rate on luxury items in 2026 is 40% on all premium goods, designer labels and luxury products. Use Busy to auto-apply the correct GST on every invoice." canonical: "https://busy.in/gst-rates/luxury-items/" author: "Jagdish Prasad" published: "2025-05-15T12:18:35.000Z" category: "GST Rates" --- - GST rates for luxury items have been revised, with specified high-end cars and motorcycles attracting **40% GST without compensation cess**. - GST on luxury goods such as clothing, accessories, perfumes, watches, and other high-value items depends on their specific HSN classification and applicable GST rate. - Jewellery attracts **3% GST** under the applicable GST classification. - Hotel rooms with a value of supply above ₹7,500 per unit per day attract **18% GST** as per applicable GST provisions. - Businesses selling luxury goods must comply with GST requirements, including registration, correct invoicing, HSN classification, and record maintenance. # 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. ## **New GST Rate on Luxury Items in India** The revised GST rates applicable from **22 September 2025** are provided below for select luxury items (no compensation cess applicable). ## **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 | | Clothing and accessories | Varies | **Applicable GST rate based on HSN classification** | 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% GST slab replaces the earlier 28% GST plus compensation cess structure for specified luxury and sin goods such as high-end vehicles, motorcycles, yachts, and private aircraft. ## 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. **Get a Free Trial –** [**Best Accounting Software For Small Business**](https://busy.in/accounting-software/) ## 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 | **Get a Free Trial –** [**Best GST Accounting Software For Small Business**](https://busy.in/accounting-software/gst-accounting/) Live Demo Available Today ## Track TCS on Luxury Item Sales Above ₹50 Lakh Threshold Trusted by 6,00,000+ Users 4.6 Google Rating \* No credit card required ## **GST on Luxury Items in India: Key Insights** - GST rates on luxury items vary based on the product category and applicable HSN classification. - Products such as cosmetics and other high-value goods attract GST according to their specific classification and applicable rate. - Jewellery attracts **3% GST** under the applicable GST classification. ## **Impact on Buyers** - Buyers of specified luxury vehicles are subject to **40% GST without compensation cess** from 22 September 2025. - Retail prices generally include GST, while registered businesses show GST separately on tax invoices. ## 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](https://busy.in/gst/what-expenses-can-be-claimed-as-itc/) on office decor, ads, and service expenses **Explore a Free Demo –** [**Best Inventory Management Software For Small Business**](https://busy.in/accounting-software/inventory-management/) ## Conclusion Understanding the **gst for luxury items** helps buyers estimate final prices and allows businesses to stay compliant with proper classification and billing. ## About the author **Jagdish Prasad** 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 ### What is the GST rate for luxury cars in India? Specified luxury cars attract **40% GST without compensation cess** from 22 September 2025. ### Is jewellery considered a luxury item under GST? Jewellery attracts **3% GST** under the applicable GST classification. No additional compensation cess applies. ### 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. 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