New GST for Luxury Items: High-End Goods and Applicable Rates
- Specified mid-size and large cars, qualifying utility vehicles and motorcycles above 350 cc attract 40% GST without compensation cess from 22 September 2025.
- 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 dealing in luxury goods must apply the correct HSN classification and GST rate; GST registration requirements depend on the applicable provisions and turnover thresholds.
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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Luxury Items With GST Rate Change From 22 September 2025
| Luxury Item | HSN Code | GST Rate From 22 Sep 2025 | Rate Before 22 Sep 2025 |
|---|---|---|---|
| Specified mid-size and large cars | 8703 | 40% | 28% + applicable compensation cess |
| Qualifying utility vehicles/SUVs | 8703 | 40% | 28% + applicable compensation cess |
| Motorcycles above 350 cc | 8711 | 40% | 28% + 3% compensation cess |
| Aircraft for personal use | 8802 | 40% | 28% + 3% compensation cess |
| Yachts and other vessels for pleasure or sports | 8903 | 40% | 28% + 3% compensation cess |
Luxury Item
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Other Luxury and High-Value Items
| Item | HSN/SAC | GST Rate From 22 Sep 2025 | Rate Before 22 Sep 2025 |
|---|---|---|---|
| Perfumes and toilet waters | 3303 | 18% | 18% |
| Personal deodorants | 3307 | 18% | 18% |
| Watches | 9101 / 9102 | 18% | 18% |
| Jewellery of precious metals | 7113 | 3% | 3% |
| Hotel accommodation above ₹7,500 per unit per day | SAC 9963 | 18% | 18% |
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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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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 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.
