GST on salon services in India: the 5% rule, explained

GST on salon services in India is 5%: 2.5% CGST plus 2.5% SGST, from 22 September 2025. It covers haircuts, colour, facials, waxing, threading, manicures, pedicures, massages and other beauty and well-being work. The catch is that the 5% comes without input tax credit. You can’t claim back the GST you pay on colour, rent or electricity, and you can’t choose 18% with credit instead. A ₹1,000 haircut is ₹1,050 if you add GST on top, or ₹952.38 plus ₹47.62 GST if your ₹1,000 price already includes it.

The 5% GST rate on salon services, at a glance

The rate comes from Notification No. 15/2025-Central Tax (Rate), dated 17 September 2025. From 22 September 2025 it rewrote the entry for “beauty and physical well-being services”, Group 99972 under SAC heading 9997. Central tax is 2.5% and state tax matches it, so the client pays 5% in all. In a union territory without a legislature, such as Chandigarh, UTGST takes the place of SGST at the same 2.5%.

The notification adds one condition: the rate applies only if credit of the input tax on goods and services used for the service has not been taken. That condition is the whole story of the change, and we come back to it below.

Which code? If your total turnover last year was up to ₹5 crore, a 4-digit code (9997) is enough, and on bills to people who aren’t registered for GST you may leave it off. Above ₹5 crore you need the 6-digit code. Your CA will pick the exact one; all four carry 5%.

What changed from 18%, and why there’s no option

Before 22 September 2025, salon services were taxed at 18%, and the salon could claim credit for the GST it paid on purchases. The GST Council cut the rate to 5% but took the credit away. CBIC’s own FAQ is blunt: the 5% without credit is mandatory, and service providers can’t choose to charge 18% with credit instead.

What “without credit” means in practice:

• No claim on things used for services. GST on colour tubes, developer, the shampoo at the basin, towels, rent, electricity, repairs, advertising and software (your Frizzi plan included) is a cost now, not something you get back.
• Shared costs get split. If you also sell retail products, CBIC says credit on things used for both must be reversed as if the 5% services were exempt. Your accountant works out the share.
• Retail stock is different. GST on products bought only to resell may still be claimable. That’s a question for your CA, and our guide to GST on salon products explains the product rates.

Bills dated before 22 September 2025 stay at 18%; you don’t reissue them. A package sold at 18% before the change and used after it is a grey area: ask your CA before you refund or adjust anything.

Do you need to register for GST?

You must register once your aggregate turnover in a financial year goes over ₹20 lakh (₹10 lakh in a few special category states). Aggregate turnover counts every branch under the same PAN across India, services and products together. Five small salons can cross the line even if no single one does.

• Not registered: you can’t charge GST at all. Your bill has no GSTIN and no tax lines.
• Registered: every service bill carries 5%, and you file returns monthly or quarterly through your CA.
• Composition scheme: small service businesses (up to ₹50 lakh turnover last year) can instead pay a flat rate on turnover. The law caps the central part at 3%, so up to 6% in all. You can’t collect GST from clients under it and get no credit. With services at 5% that you can charge the client, compare both with your CA before choosing.

Worked examples: GST on top, or inside the price

Most salons print prices that already include GST, so the client sees one round number. Others print “+ GST”. Both are legal; the menu just has to be clear. The sums:

• GST on top: GST = price × 5 ÷ 100. Half is CGST, half SGST.
• GST inside: taxable value = price × 100 ÷ 105. GST = price − taxable value.

Two rules make these work. First, a discount shown on the bill comes off before GST, so the member pays tax on ₹1,080, not ₹1,200. Second, round the total to the rupee with a separate “round off” line, not by changing the tax. Try your own prices here:

There’s also a full-page salon GST calculator you can bookmark for the desk.

Memberships, packages, vouchers and wallets

Prepaid money is where most salons get confused, because the client pays today for something done later. For services, GST is due on the earlier of the invoice or the payment.

• Packages (“5 hair spas for ₹5,000”): bill the package at 5% when it’s sold. Later visits show the session at ₹0, so there’s no second round of GST. See how to design salon packages.
• Memberships: the fee is taxed when you sell it. A membership that gives discounts on your own services is usually billed at the salon rate, 5%, but no ruling settles it, so confirm with your CA. Our guide on memberships that make money covers the pricing.
• Gift vouchers: no GST when sold; GST when the voucher pays for a service. Details in gift vouchers and GST.
• Wallet top-ups and booking deposits: this one isn’t settled. Money received in advance for services can be taxable when received. Some CAs treat a wallet that can be spent on anything as a voucher, taxed when spent. A deposit for one named appointment looks more like an advance. Get your CA’s view in writing.

Products are taxed on their own

The 5% rule is for services. A shampoo or serum you sell over the counter is goods, taxed at its own rate: 5% for shampoo, hair oil, talc and soap bars, 18% for most other cosmetics. One bill can carry both rates, each on its own line, with a GST summary by rate at the bottom. The products guide has the full list with HSN codes.

Common mistakes on salon bills

1. Services still at 18% in old billing software or a printed rate card. Every one of those bills overcharges the client.
2. Claiming credit on salon costs: colour, rent, electricity, software. At 5% without credit, that claim isn’t allowed.
3. One rate for every product. A 5% shampoo billed at 18% overcharges; a serum at 5% undercharges.
4. IGST for a client from another state. The service happens in your salon, so it is CGST + SGST like any other bill.
5. GST on tips. A voluntary tip that goes to the staff isn’t part of your price. See tips and GST.
6. Discount after GST. Take the discount off first, then work out the tax.
7. Gaps in bill numbers. Cancel with a reason; never delete or reuse a number. The invoice format guide explains why.

How Frizzi bills salon GST

In Frizzi, services are billed at 5% only: the app refuses any other rate for a service, so nobody can leave one at 18% by mistake. Bills show CGST and SGST with SAC 9997. “Prices include GST” is on by default; switch it off if your menu says “+ GST”. Products get 5% or 18%, suggested from the HSN code or name. A salon with a GSTIN prints a tax invoice; without one, the bill carries no tax.

At month-end the Monthly GST report and the HSN/SAC summary give your CA the numbers for the returns. All of this is in Basic, ₹99 a branch a month. See GST billing and reports, or try the demo till.

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