Looking for expert help with GST and income tax for cosmetics shop owners? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- From 22 September 2025, hair oil, shampoo, toilet soap bars, toothpaste, tooth powder, talcum and face powder, shaving cream, toothbrushes and combs are 5% GST (Notification 9/2025-Central Tax (Rate), Schedule I).
- Lipstick, face and body creams, sunscreen, nail polish, perfume, deodorant, hair conditioner, hair colour, body wash and liquid hand wash are 18% (Schedule II).
- Kajal (not pencil sticks), kumkum, bindi, sindur and alta are exempt.
- A gift box that mixes 5% and 18% items at one price is taxed at 18% on the whole box.
- Under Section 44AD, deemed profit is 6% of digital receipts and 8% of cash. Moving cash sales to UPI lowers the figure.
What is the GST rate on cosmetics in India? From 22 September 2025, most make-up, skin care, perfumes and deodorants attract 18% GST under Schedule II of Notification 9/2025-Central Tax (Rate). Daily-use items named in Schedule I, including hair oil, shampoo, toilet soap bars, toothpaste and talcum powder, are 5%. Kajal, kumkum, bindi, sindur and alta are exempt.
A cosmetics counter is one of the few shops where two products on the same shelf, from the same brand, carry different GST rates. The shampoo is 5%. The conditioner next to it is 18%. The soap bar is 5%, and the body wash beside it is 18%. Billing software set up with one default rate gets a large part of the bill wrong, and it goes wrong the same way every day. This guide lists what's at which rate for AY 2026-27, the gift-box rule, and how to work out your income tax. If you also run a parlour, read our GST guide for beauty salons and our income tax guide for salon owners.
What GST rate applies to what you sell?
Comparison
GST Rates for Cosmetics Shop Items (from 22 September 2025)
| Item | HSN | GST rate |
|---|---|---|
| Hair oil, shampoo | 3305 | 5% |
| Toilet soap in bars, cakes or shapes | 3401 | 5% |
| Toothpaste, tooth powder, dental floss | 3306 | 5% |
| Talcum powder, face powder | 3304 | 5% |
| Shaving cream, shaving lotion, aftershave lotion | 3307 | 5% |
| Mehendi paste in cones | 1404 / 3305 | 5% |
| Toothbrushes | 9603 21 00 | 5% |
| Combs, hair clips, hairpins, curlers | 9615 | 5% |
| Kajal (not pencil sticks), kumkum, bindi, sindur, alta | 3304 | Exempt |
| Lipstick, make-up, face and body creams, sunscreen, nail polish | 3304 | 18% |
| Perfumes and toilet waters | 3303 | 18% |
| Conditioner, hair colour, hair gel and other hair products | 3305 | 18% |
| Deodorants, bath preparations, other toiletries | 3307 | 18% |
| Body wash, face wash, liquid hand wash | 3401 | 18% |
| Razors and blades | 8212 | 18% |
| Electric shavers, trimmers, hair clippers | 8510 | 18% |
| Powder puffs, scent sprays | 9616 | 18% |
Source: Notification 9/2025-Central Tax (Rate), Schedule I S. No. 77, 244 to 249, 251, 504, 506; Schedule II S. No. 60 to 64, 66, 372, 483, 631; Notification 10/2025-Central Tax (Rate) S. No. 117
Within your state you charge half as CGST and half as SGST, so 2.5% + 2.5% or 9% + 9%. To another state it's the full rate as IGST. Stock a supplier invoiced before 22 September 2025 keeps the input tax credit (ITC) at whatever rate the supplier charged. Your sale today goes out at the current rate.
Where do cosmetics shops get the rate wrong?
The 5% list names products, not categories. If an item isn't on it, it's 18% by default under its heading. Three pairs cause most of the errors:
- Soap bar vs body wash. The 5% entry is for toilet soap "in the form of bars, cakes, moulded pieces or shapes". Skin-washing liquids and creams put up for retail sale sit in the 18% entry for heading 3401. Face wash is 18% whether it's classed under 3401 or 3304.
- Shampoo vs conditioner. Heading 3305 is 18% for every hair preparation other than hair oil, shampoo and mehendi paste in cones. Conditioner, hair serum, hair colour and hair gel are all 18%.
- Talcum powder vs compact. Talcum powder and face powder are 5%. Foundation, compact, blush and other make-up in the same heading are 18%.
Say a customer buys a shampoo for Rs 525 and a conditioner for Rs 590, both GST-inclusive. The shampoo carries Rs 25 GST (525 x 5/105). The conditioner carries Rs 90 (590 x 18/118). Bill both at 5% and you under-report Rs 62 of tax on the conditioner, which works out to Rs 90 minus Rs 28 (590 x 5/105). Bill both at 18% and the shampoo line overstates your tax by Rs 55. Set up each product with its own HSN and rate in your billing software, so the counter staff never choose a rate.
What about gift boxes and combo packs?
Festive gift boxes often mix 5% and 18% items. If they're packed together and sold at one price, and the items aren't naturally sold together in the ordinary course of business, it's a mixed supply. Section 8(b) of the Central Goods and Services Tax (CGST) Act taxes the whole supply at the highest rate in it.
Step-by-Step Guide
Pricing a Mixed Gift Box
List what goes in the box
Example: shampoo (5%), toilet soap bars (5%) and a perfume (18%), sold as one gift box for Rs 1,180 including GST.
Find the highest rate
The perfume is 18%, so the whole box is 18% under Section 8(b), CGST Act.
Work out the tax
Rs 1,180 x 18/118 = Rs 180 GST. Taxable value Rs 1,000.
Or sell the items separately
If each item has its own price on the invoice and the customer can buy them on their own, each line carries its own rate.
Source: Section 8(b), CGST Act 2017
When do you need GST registration?
If you only sell goods, registration is required once aggregate turnover crosses Rs 40 lakh in most states. Telangana and several other states kept the Rs 20 lakh limit (Notification 10/2019-Central Tax). A Hyderabad cosmetics store selling Rs 25 lakh a year must register. Selling to a buyer in another state needs registration from the first rupee (Section 24(i), CGST Act). Our GST registration service can set this up for you.
Regular scheme or composition?
Under the composition scheme, a trader pays 1% of turnover (Rule 7, CGST Rules), up to Rs 1.5 crore a year. You can't charge GST on your bill, can't claim ITC and can't sell to other states (Section 10(2)(c), CGST Act). You issue a bill of supply, not a tax invoice.
Most cosmetics stores sell to walk-in customers who don't claim ITC, and they sell at the printed price. That makes composition worth a real comparison. Take an 18% lipstick you buy for Rs 100 plus Rs 18 GST and sell at Rs 150:
- Regular scheme: GST in the Rs 150 is Rs 22.88 (150 x 18/118). You pay Rs 4.88 after Rs 18 ITC. You keep Rs 27.12.
- Composition: you pay 1% of Rs 150, so Rs 1.50. The Rs 18 GST you paid is a cost. You keep Rs 30.50 (150 minus 118 minus 1.50).
On these numbers composition leaves you Rs 3.38 more per unit. It stops making sense if you supply salons, spas or other shops that want a tax invoice to claim ITC, or if you plan to sell to customers in other states. See our composition scheme guide for the full conditions.
How is your income taxed for AY 2026-27?
Section 44AD lets a resident individual, HUF or partnership firm (not an LLP) declare a deemed profit instead of keeping full books. The limit is Rs 2 crore of turnover, or Rs 3 crore where cash receipts are within 5% of total receipts. The deemed profit is 6% of receipts by UPI, card or bank and 8% of cash receipts. You can declare more than this.
Example 1 (Rs 1.2 crore turnover, new regime): Rs 95 lakh comes by UPI and card, Rs 25 lakh in cash.
- Deemed profit: 6% of Rs 95 lakh (Rs 5,70,000) plus 8% of Rs 25 lakh (Rs 2,00,000), so Rs 7,70,000.
- Tax: 5% of Rs 3,70,000 (the part above Rs 4 lakh), so Rs 18,500.
- The Section 87A rebate covers income up to Rs 12 lakh. Tax payable: nil, assuming no other income.
Example 2 (Rs 2.8 crore turnover, new regime): A store that also supplies salons takes Rs 10 lakh in cash (3.57% of receipts), so the Rs 3 crore limit applies. The other Rs 2.7 crore is digital.
- Deemed profit: 6% of Rs 2.7 crore (Rs 16,20,000) plus 8% of Rs 10 lakh (Rs 80,000), so Rs 17,00,000.
- Tax: Rs 20,000 + Rs 40,000 + Rs 60,000 on the slabs up to Rs 16 lakh, plus 20% of Rs 1,00,000 (Rs 20,000). Total Rs 1,40,000. No 87A rebate above Rs 12 lakh. Add 4% cess of Rs 5,600. Tax payable: Rs 1,45,600.
If that store's cash had been Rs 15 lakh (5.36%), the Rs 3 crore limit wouldn't apply, and at Rs 2.8 crore it would need books and a tax audit.
Step-by-Step Guide
Before You Declare Less Than the Section 44AD Figure
Check the last five years
If you declared under Section 44AD in any of them, going below it now bars you from Section 44AD for the next five assessment years (Section 44AD(4)).
Check the audit trigger
Under that bar, if your income is above the basic exemption limit you must keep books and get a tax audit (Sections 44AD(5) and 44AB(e)).
Check the turnover audit limit
Filing on books above Rs 1 crore turnover needs an audit under Section 44AB, unless cash receipts and cash payments are each within 5%, which raises the limit to Rs 10 crore.
Make sure the books support the figure
Your GST returns and bank statements show your sales. A declared profit well below what they imply has to be backed by proper accounts.
File the right form
ITR-4 for Section 44AD if total income is within Rs 50 lakh and other conditions are met; ITR-3 if you file on books.
Source: Sections 44AA, 44AB, 44AD and 87A, Income-tax Act 1961; Finance Act 2025
See our Section 44AD guide and old vs new regime guide.
Common mistakes cosmetics shops make
- One default rate for the whole store. A typical cosmetics range mixes 5%, 18% and exempt items. Set the rate per product.
- Treating body wash and face wash like soap. Only bars and cakes are 5%.
- Billing conditioner or hair colour at the shampoo rate. Only hair oil and shampoo (and mehendi cones) are 5% in heading 3305.
- Charging 5% on a mixed gift box. One 18% item makes the whole single-price box 18%.
- Charging GST on kumkum, bindi or kajal. They're exempt. Kajal pencil sticks aren't covered by the exemption, so check those separately.
How Tax Garden helps cosmetics retailers
We set up your item master with the right HSN and rate for every product, then file GSTR-1 and GSTR-3B with gift boxes and exempt items reported correctly. See our GST return filing service. We also compare composition against the regular scheme on your real margins, and prepare your ITR on Section 44AD or books; see our ITR filing service and pricing. For a general store selling groceries too, see our income tax guide for kirana store owners.
