Luxury Tax in India

Yes. The luxury tax is an indirect tax imposed on specific luxury items, while income tax is a direct tax levied on individuals' earnings. The luxury tax used to apply uniformly to everyone, but it is now subsumed by GST. Income tax follows a progressive tax structure, with higher rates for higher incomes.

No. There is no need for separate registration. However the nature of the products or services you deal with should be mentioned while applying for GST registration.

Under the GST Law, luxury goods or services are not defined separately. Instead, the law imposes a higher tax rate on items that were previously subject to a luxury tax, along with the addition of a GST compensation cess. For instance, luxury cars attract the highest GST rate of 28% along with a GST compensation cess.

Yes. The luxury tax is an indirect tax that is applicable only when individuals purchase luxury goods or avail themselves of luxury services. It is considered regressive because it applies uniformly to all consumers regardless of their income level. The tax is specifically targeted at luxury items and services to discourage excessive consumption in this category.

Wealth tax targets an individual's or company's net wealth, aiming to reduce income inequality. Luxury tax, on the other hand, applies to specific luxury goods and services, generating revenue and discouraging non-essential consumption. In India, wealth tax has been abolished, and luxury tax is now included in the Goods and Services Tax (GST) system, streamlining the taxation process and ensuring uniformity.

No, you needn’t make separate registrations for luxury goods and services under GST laws. 

Luxury Tax is currently taxed under GST, which is an indirect tax and hence, cannot be set off against income tax payments

Below are the services on which Luxury Tax becomes applicable after the implementation of the Goods and Services Tax:

• Services offered to the members of a club like charges, donations, deposit or any other charges as mandated by the Indian state where the service is provided.
• Services offered by hotels to their in-house residents.
• Hotel residents or restaurant customers availing services at in-house spas, gymnasiums, health clubs, swimming pools, beauty parlours, business conference halls, wedding banquet halls, etc.