Luxury tax is charged on more expensive cars. It is not a percentage of the whole price: it applies only to the part of the CIF value that is above a threshold, so a car just over the threshold pays tax on a small amount.
How it is worked out
Luxury tax = (CIF value − threshold) × the luxury tax rate of the class.
If the CIF value is at or below the threshold, there is no luxury tax. The threshold and the rate are different for each class of vehicle.
Thresholds today
These figures are read from the published rates (version 2), so they stay current when a gazette changes them.
It applies to passenger cars of every fuel type and to electric vans. Other vans, trucks, buses and the remaining classes do not pay it. Each class page says whether it does: see import tax by vehicle type.
Where it sits in the calculation
Luxury tax is worked out on the CIF value, after the excise duty. It is not part of the value on which VAT and SSCL are charged, because the VAT Act does not list it. That is why adding luxury tax raises the total by exactly the amount of the tax and not by more. The whole order of charges is in how the tax is calculated.
Why the CIF value matters here
Because only the part above the threshold is taxed, a small change in CIF near the threshold changes the luxury tax directly, rupee for rupee, at the class's rate. Try two nearby values in the calculator to see the effect.
Where the thresholds come from
The thresholds and rates are set by the Finance Act No. 35 of 2018 and the gazettes that amend them. The list of gazettes, with links, is at the end of the calculator page. It was last checked on Oct 17, 2026.