What is the GST rate on beauty salon and parlour services in India in 2026? From 22 September 2025, all beauty and physical well-being services (salons, parlours, barber shops, spas, massage parlours, gyms and fitness centres) attract 5% GST without Input Tax Credit. The rate was cut from 18% by Notification 15/2025-Central Tax (Rate), issued on the recommendation of the GST Council at its 56th meeting as part of the GST 2.0 rate restructuring. The reduction applies to the whole SAC group 99972 (beauty and physical well-being services).
The beauty and personal care industry is one of India's largest service sectors by establishment count, with lakhs of salons, parlours, and barber shops operating across the country. The September 2025 GST rate cut from 18% to 5% significantly changed the economics for salon owners. This guide covers the new rate, SAC codes, registration rules, the critical product vs service distinction, and how to handle GST billing correctly. If you also need the income tax side, read our income tax guide for salon owners and beauticians.
The GST Rate Change: 18% to 5%
The 56th GST Council meeting recommended reducing GST on beauty and physical well-being services from 18% to 5%. Notification 15/2025-Central Tax (Rate), dated 17 September 2025, gave effect to it from 22 September 2025 by substituting Serial No. 35 of Notification 11/2017-Central Tax (Rate). Item (i) of that entry now reads "Beauty and physical well-being services falling under Group 99972" at 2.5% central tax, with the condition that "credit of input tax charged on goods and services used in supplying the service has not been taken". The same 2.5% applies as State tax, so the total is 5%. For the full picture of the new slabs, see our GST 2.0 rate structure guide.
Tax Rate Chart
GST on Salon and Beauty Services: Before vs After
Rate change effective September 22, 2025
Salon Services (Before Sept 22, 2025)
ITC was available
Salon Services (After Sept 22, 2025)
No ITC available
Gym/Fitness/Spa (Before Sept 22, 2025)
ITC was available
Gym/Fitness/Spa (After Sept 22, 2025)
No ITC available
Beauty Products (Standalone Sale)
Goods rate by HSN: shampoo, hair oil, soap 5%; make-up, skincare, hair dye 18%
Source: Notification 15/2025-Central Tax (Rate), Serial No. 35; Notification 9/2025-Central Tax (Rate) for goods
The ITC Trade-Off
Under the old 18% regime, salon owners could claim ITC on:
- Rent (18% GST)
- Equipment and furniture
- Professional products purchased from distributors
- Software and POS systems
Under the new 5% regime, no ITC is claimable on goods and services used to supply the salon service. The notification makes the 5% rate mandatory: its Explanation says the item (i) rate "is a mandatory rate and shall not be levied at the rate specified under this item", meaning the 18% entry for other services in item (ii). A salon cannot choose 18% with ITC instead.
For most small and medium salons, this is still beneficial because:
- The tax charged to customers drops from 18% to 5% (a 13-percentage-point reduction)
- The biggest costs of a salon, staff salaries, carry no GST at all, so the ITC given up is usually much smaller than the rate cut
- Lower prices for customers, with no change in the salon's own margin
For high-end salons with expensive equipment, premium product lines, and high-rent locations, the loss of ITC offsets part of the rate reduction. Work out your own numbers before repricing.
SAC Codes for Salon and Beauty Services
The CBIC scheme of classification of services places all these services in group 99972 (beauty and physical well-being services). Every code in the group is taxed at 5% without ITC.
| SAC Code | Official Description | What It Covers |
|---|---|---|
| 999721 | Hairdressing and barbers services | Hair washing, trimming and cutting, shaving and beard trimming, hair colouring and tinting |
| 999722 | Cosmetic treatment (including cosmetic/plastic surgery), manicuring and pedicuring services | Facials and other face and beauty treatments, manicure, pedicure, beauty and make-up counselling |
| 999723 | Physical well-being services including health club and fitness centre | Spas, saunas, steam baths, Turkish baths, solaria, massage parlours, slimming salons, fitness centres |
| 999729 | Other beauty treatment services n.e.c. | Body care, depilation (waxing, threading), UV and infrared treatments, tattoo artists, body piercing |
Washing, cleaning and dyeing services (group 99971) are not part of this entry. They fall in item (ii) of Serial No. 35 at 18%, so a laundry service run inside a spa or salon is billed at 18%.
Gym and Fitness Centres: Same Rate
Physical well-being services also moved from 18% to 5%, because they are in the same group 99972:
| Service | SAC Code | GST Rate |
|---|---|---|
| Gym and fitness centre membership | 999723 | 5% without ITC |
| Health club services | 999723 | 5% without ITC |
| Spa, sauna and steam bath | 999723 | 5% without ITC |
| Massage parlour and slimming centre | 999723 | 5% without ITC |
Trainers and gym owners can read our income tax and GST guide for gym trainers for the income tax side.
GST Registration Threshold for Salons
Who Must Register
Under Section 22(1) of the CGST Act, a supplier must register once its aggregate turnover in a financial year exceeds the limit below. The higher Rs 40 lakh limit is only for suppliers engaged exclusively in supplying goods, so it never applies to a salon.
| Where the Salon Operates | Registration Threshold |
|---|---|
| Telangana, Andhra Pradesh, Karnataka, Maharashtra, Delhi, Tamil Nadu and all other States and UTs not listed below | Rs 20 lakh |
| Manipur, Mizoram, Nagaland, Tripura (special category States for Section 22) | Rs 10 lakh |
Section 22 defines special category States by reference to Article 279A of the Constitution but specifically excludes Jammu and Kashmir, Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand, so salons there also use the Rs 20 lakh limit. Our GST registration turnover limit guide explains the goods vs services split in more detail.
Aggregate turnover includes the total value of all taxable supplies, exempt supplies, exports, and inter-State supplies of all branches under the same PAN. It does not include GST collected.
If your salon is close to the limit, Tax Garden can handle your GST registration for a salon or spa, including the choice of principal place of business and SAC codes.
Who Does NOT Need to Register
A neighbourhood barber shop earning Rs 8 lakh per year, or a home-based beautician earning Rs 12 lakh, is below the threshold and:
- Does not need a GSTIN
- Does not charge GST on services
- Does not file any GST returns
- Cannot issue tax invoices or collect GST (a plain bill without GST is issued)
Voluntary Registration
Salons below the threshold can voluntarily register for GST. This is typically done when:
- The salon has corporate clients who require a GSTIN on invoices
- The salon wants to appear in GST-verified business directories
- The salon plans to expand and wants to set up systems early
Caution: Once voluntarily registered, the salon must file GST returns (even nil returns) for every period, monthly or quarterly under QRMP. The old rule that barred cancelling a voluntary registration within one year was omitted in January 2018 (Notification 3/2018-Central Tax).
Product vs Service: The Critical Distinction
The most common GST compliance issue for salons is the treatment of products:
Products Used in Service Delivery (5% GST)
When a product is consumed as part of a service, the entire transaction is a composite supply under Section 2(30) of the CGST Act. Under Section 8, it is taxed as the principal supply, which here is the service.
Examples:
- Hair dye used during a hair colouring session
- Shampoo and conditioner used during a haircut
- Wax strips used during a waxing service
- Facial cream used during a facial treatment
- Massage oil used during a body massage
The salon bills the customer for "hair colouring service" at 5% GST. The cost of the hair dye is embedded in the service price. There is no need to separately invoice the product.
Products Sold as Retail (5% or 18% GST)
When a salon sells products as standalone retail items (the customer takes the product home), this is a sale of goods, not a service. The rate comes from Notification 9/2025-Central Tax (Rate): Schedule I items are 5% and Schedule II items are 18%.
| Product Category | HSN Code | GST Rate |
|---|---|---|
| Shampoo and hair oil | 3305 | 5% |
| Toilet soap in bars or cakes | 3401 | 5% |
| Talcum powder and face powder | 3304 | 5% |
| Conditioner, hair serum, hair colour (retail pack) | 3305 | 18% |
| Skincare (moisturiser, cleanser, sunscreen) | 3304 | 18% |
| Make-up (lipstick, foundation, eye shadow) | 3304 | 18% |
| Perfume | 3303 | 18% |
| Liquid body wash and face wash | 3401 | 18% |
For the full item list, see our GST guide for cosmetics and beauty products shops.
How to Handle Mixed Billing
A customer gets a haircut (service, 5% GST) and buys a face cream (goods, 18% GST) in the same visit. The salon must:
- Invoice the service and product separately on the same or different invoices
- Apply 5% GST on the haircut (SAC 999721)
- Apply 18% GST on the face cream (HSN 3304)
- Use the correct SAC/HSN codes for each line item
Do not bill the face cream as part of the service at 5%. On audit, this will be reclassified as a sale of goods at 18%, with interest and penalty. Note that a retail bottle of shampoo (HSN 3305) is itself 5% from 22 September 2025, but it is still a separate sale of goods with its own HSN line. Every line then flows into GSTR-1 and GSTR-3B, which is where most rate errors get caught; our GST return filing service maps each SAC and HSN line to the right rate before filing.
Composition Scheme for Salons
Small salons can opt for the Composition Scheme for service providers under Section 10(2A) of the CGST Act:
Eligibility
- Turnover limit: Up to Rs 50 lakh aggregate turnover in the preceding financial year
- Service providers: First allowed by Notification 2/2019-Central Tax (Rate) from 1 April 2019, then written into Section 10(2A) from 1 January 2020
- Rate: 6% of turnover in the State (3% CGST + 3% SGST under Rule 7 of the CGST Rules)
- Not allowed if the salon makes inter-State supplies, supplies services through an e-commerce operator that collects TCS, or makes any supply not leviable to GST
Composition vs Regular: Which Is Better?
| Parameter | Composition Scheme (Section 10(2A)) | Regular 5% GST |
|---|---|---|
| GST rate | 6% (3% CGST + 3% SGST) on turnover | 5% (2.5% CGST + 2.5% SGST) on services |
| Who bears the tax | Salon pays from its own revenue | Charged to the customer on the invoice |
| Retail products | Same 6% on all turnover | Product's own rate (5% or 18%) |
| ITC claim | Not available | Not available on inputs used for the service |
| Inter-State supply | Not allowed | Allowed |
| Supply through e-commerce operators collecting TCS | Not allowed | Allowed |
| Invoice type | Bill of supply (cannot charge GST separately) | Tax invoice (GST shown separately) |
| Returns | CMP-08 by the 18th after each quarter, GSTR-4 annually by 30 June | GSTR-1 and GSTR-3B, monthly or quarterly under QRMP |
For most salons below Rs 50 lakh turnover, the regular 5% rate is better than the 6% composition scheme because:
- The rate is lower (5% vs 6%)
- Under composition, the 6% comes out of the salon's own pocket because it cannot be collected from customers
- Neither scheme allows ITC on service inputs
- The regular scheme allows selling through e-commerce platforms such as home-service apps
The main advantage of composition is simpler return filing. A salon that sells a lot of 18% retail products could also find the flat 6% attractive, but run the numbers first. For the full rules, read our GST composition scheme eligibility guide. Whichever route you pick, Tax Garden can take over the quarterly or monthly GST return filing for your salon.
Common Compliance Mistakes
1. Billing Products at Service Rate
Selling 18% retail products (make-up, skincare, hair colour) at the 5% service rate. This is a common audit finding for salons. The department can compare purchase invoices (products bought at 18%) against sales invoices (billed at 5%) and raise a demand for the differential.
2. Not Separating Service and Product Revenue
Salons that maintain a single revenue line ("salon income") without distinguishing service revenue (5%) from product sales (5% or 18% by HSN) will face classification issues on audit.
3. Claiming ITC Under the 5% Regime
Some salons continue to claim ITC on purchases used for services after the September 2025 rate change. The 5% rate is conditional on that credit not being taken, so ITC claimed on service inputs is open to reversal with interest.
4. Missing Registration Threshold
A salon earning Rs 18 lakh from services and Rs 4 lakh from product sales has an aggregate turnover of Rs 22 lakh. This exceeds the Rs 20 lakh threshold. Product sales count toward aggregate turnover even if they are taxed at different rates.
5. Not Filing Nil Returns
Registered salons that have no revenue in a particular month must still file nil GSTR-3B and GSTR-1. Failure to file attracts a late fee of Rs 50 per day (Rs 20 per day for nil returns), capped at Rs 500 per return for nil returns and at Rs 2,000 to Rs 10,000 per return otherwise, depending on turnover (Notification 19/2021 and 20/2021-Central Tax). Our GST late fee and penalty guide has the full table.
Salon Billing Example
Here is a sample GST invoice for a salon visit with both service and product components:
| Item | SAC/HSN | Taxable Value | GST Rate | GST Amount | Total |
|---|---|---|---|---|---|
| Haircut and styling | 999721 | Rs 500 | 5% | Rs 25 | Rs 525 |
| Hair colouring (includes dye) | 999721 | Rs 2,000 | 5% | Rs 100 | Rs 2,100 |
| Facial treatment | 999722 | Rs 1,500 | 5% | Rs 75 | Rs 1,575 |
| Shampoo (retail bottle) | 3305 | Rs 400 | 5% | Rs 20 | Rs 420 |
| Face cream (retail) | 3304 | Rs 600 | 18% | Rs 108 | Rs 708 |
| Total | Rs 5,000 | Rs 328 | Rs 5,328 |
The hair colouring service includes the cost of hair dye. The dye is consumed during the service and is billed as part of the service at 5%. The retail shampoo and face cream are separate sales of goods at their own rates (5% for HSN 3305 shampoo, 18% for HSN 3304 face cream).
Key Notifications and References
| Reference | What It Says |
|---|---|
| Notification 15/2025-Central Tax (Rate), dated 17 Sept 2025 | Substitutes Serial No. 35 of Notification 11/2017-CT(R): group 99972 at 2.5% CGST without ITC from 22 Sept 2025; washing, cleaning, dyeing and other services at 9% CGST |
| Notification 11/2017-Central Tax (Rate) | Principal services rate notification and scheme of classification of services |
| Notification 9/2025-Central Tax (Rate) | Goods rates from 22 Sept 2025 (shampoo, hair oil, soap at 5%; make-up and skincare at 18%) |
| Section 22, CGST Act 2017 | Registration thresholds and special category States |
| Section 10(2A), CGST Act 2017 and Rule 7, CGST Rules | Composition for service providers, Rs 50 lakh limit, 3% CGST |
| Section 2(30) and Section 8, CGST Act 2017 | Composite supply taxed as the principal supply |
This guide is based on the CGST Act 2017 (as amended), CBIC rate notifications, and the CGST Rules current as of October 2026. GST rates on services are subject to revision by the GST Council. The composition scheme threshold and conditions may change. Consult a Chartered Accountant for advice specific to your salon or beauty business.
