Hi Smitakshi.. Luxury tax comes under Luxury Tax Act 1987 of Maharashtra. Tax is deducted based on some slabs based on the apartment/ luxury apartment/ service apartment rate. 20 percent of the luxury tax TDS is deducted as per Income Tax Act 1961.Luxury tax goes into State Government. It can be deducted as and when you pay the rent to the owner or you get it. It can be per day basis or month wise. Please consult with any lawyer or CA for further help on the same.