Luxury Tax - Check Luxury Tax Rates
Luxury tax is generally a big component of the extra bill you tend to pay at hotels or resorts. This luxury tax is chargeable on the charges incurred for the stay in the hotel or resort but cannot be applied on the beverages and food served there.
Note: Luxury Tax has been replaced by the Goods and Services Tax(GST) starting 1 July 2017 and luxury items fall in the highest tax slab.
Financial systems around the world charge taxes on national and international residents for the use of services, conduction of business, engagement in profession and the like. India is no stranger to the concept of taxation.
Moreover, India follows a system of taxation that is one of the most detailed in the world. Apart from income tax, sales tax and a variety of other standardised taxes, there are a couple of convenience taxes which are charged in India depending upon the services availed or goods bought at particular businesses.
Among various indirect tax such as Service Tax, Value Added Tax and Service Charge, Luxury Tax also forms a part of many bills. Luxury tax can mostly be seen in the usage bills of hotels, spas and specific resorts.
What is a Luxury Tax?
Payment of anything extra than the maximum retail price can be bothersome and cause inconvenience. People encounter the same thing when paying for bills at hotels and spas after a vacation, however long or short. Luxury tax comes in as a major component of the extra amount on top of the actual bill.
Interestingly, this tax is chargeable on the room rented or the overall stay charges of the hotel, resort or spa, but not on the food and beverages served. Not even on any special facilities provided at the place. In short, just the accommodation is taxed thus. Luxury tax varies from state to state and is not normally under the control of the central government.
Luxury Tax Rates in India
The tax for luxury goods and services can include but not be limited to hotels, lodging houses, resorts, congregational halls used for the purpose of weddings, conferences, exhibitions and the like. Discrete club facilities within lodging facilities can also attract an extra luxury tax.
The tax rate concerning luxuries is not tied down to any specific milestone rate set by the central or state government. Such luxury tax rates can range from 3 percent per annum to 12-13% per annum and are subject to changes and amendments from time to time depending on the individual tax laws of the state.
State | Room Tariff Range (INR/night) | Luxury Tax Rate |
Delhi | ₹750 and above | 5% or 10% |
All tariffs (health clubs, spas, gyms) | 3% | |
Goa | ₹0 – ₹500 | Exempt |
₹501 – ₹2000 | 5% | |
₹2001 – ₹5000 | 8% | |
₹5001 and above | 12% | |
Karnataka | ₹500 – ₹1000 | 4% |
₹1001 – ₹2000 | 8% | |
₹2001 and above | 12% | |
Health clubs / halls | 8% – 10% | |
Rajasthan | ₹3001 and above (Grand/Non-heritage) | 10% |
Other hotels | 8% | |
Tourism off-season | 50% reduction | |
Tamil Nadu | ₹200 – ₹500 | 5% |
₹501 – ₹1000 | 10% | |
₹1001 and above | 12.5% |
How to File Luxury Tax Returns in India
Luxury tax for any state generally falls under the jurisdiction of the Commercial Taxes Department or the Excise Department. The duty of handling such taxes falls to different departments in different states but it’s normally those institutions that also handle the imposition and collection of VAT, entertainment tax and service tax.
Different authorised departments of different states have developed their own proprietary tools and websites through which one can register as a dealer or business and accordingly fill up the requisite forms that allow one to pay luxury taxes as per how they are due.
The luxury tax returns are normally filed at around the same time as the other commercial taxes (VAT, Entertainment tax and the like) on monthly basis. On quarterly payment of taxes, luxury taxes are supposed to be paid by the last date of the month following the assessment month.
FAQs on Luxury Tax
- What is Luxury Tax in India?
Luxury Tax in India is a tax levied on luxury goods and services, such as high-end hotels, resorts, and certain luxury items.
- How is Luxury Tax calculated in India?
Luxury Tax rates vary depending on the type of service or product and the state regulations.
- Is Luxury Tax applicable under GST?
Yes, with the implementation of GST, Luxury Tax has been subsumed under it. Luxury goods and services now fall under higher GST slabs, typically ranging from 18% to 28%.
- Who is liable to pay Luxury Tax in India?
Service providers offering luxury goods or services, such as hotels and resorts, are responsible for collecting and remitting Luxury Tax to the government.
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