From lavish salon services to designer handbags and elite pens, expect prices to surge with the forthcoming tax increase

Mitali Joshi October 22, 2024
Image Source: Louis Vuitton

A set of nearly 58 goods and 24 services is poised to transition to the 28% GST slab, up from the current rates of 18% and 12%. This significant shift reflects ongoing efforts toward rate rationalization within the tax framework. A final decision is anticipated in November, during a session led by Bihar’s Deputy Chief Minister, Samrat Chaudhary, which will ultimately culminate in a comprehensive report to the GST Council.

This proposed increase has sparked discussions about the implications for consumers and businesses alike. In a recent conversation with ET, an official highlighted the luxury market perspective, stating, “If a person is paying INR 70,000 for a pen, where a normal pen can be purchased for INR 2, they will not mind paying 28% GST.”

The products and services potentially set to transition to a higher tax slab include a variety of luxury items and treatments. Notable examples are Botox treatments, high-end nail services, and luxury spa offerings at upscale salons. Additionally, super-luxury salon services are also on the list. In the realm of fashion and accessories, handbags and sunglasses priced above INR 10,000 will likely be affected, as well as premium pens that cost over INR 5,000. Furthermore, bicycles with a price tag exceeding INR 50,000 are also being considered for this tax adjustment. This proposed increase reflects a broader trend toward the taxation of high-value goods and services, aiming to align luxury consumption with higher tax contributions.

Luxury Tax Practices Around the World

In comparison to the tax structures seen in other countries, India’s proposed transition of luxury goods and services to a 28% GST slab is notably higher. While many European nations impose VAT rates ranging from 17% to 27%, these rates are still generally lower than India’s anticipated GST increase. In the United States, luxury items are subject to varying sales taxes, often significantly less than a flat 28% rate. Countries like Singapore and Australia maintain GST rates of 7% and 10%, respectively, without imposing specific luxury taxes.

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  • Mitali Joshi

    Mitali Joshi is an accomplished writer and the former editor-in-chief of Springtide Magazine. She now works as a consultant, helping brands, social initiatives, and publications shape their editorial and communication strategies. Her work has also been featured in Conde Nast Traveller, Only Natural Diamonds and Youth Incorporated Magazine.

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