Understanding GST Compliance for Indian Salons: A Complete Guide
GST compliance for salons doesn't have to be complicated. This guide breaks down everything you need to know — from registration thresholds to input tax credits.
Elite Salon Alliance ·
Understanding GST for Indian Salons: 2026 Guide
Updated for the GST rate change of 22 September 2025
Do Indian Salons Need to Register for GST?
You must register once your annual turnover goes above ₹20 lakh (₹10 lakh in special category states). Below that, you can still register voluntarily. Under the new rules salons can no longer claim input tax credit, so the main reasons to register voluntarily are corporate clients or partners who require a GSTIN. Ask your CA whether it's worth it for your salon.
GST Rates for Salon Services
Since 22 September 2025, salon and beauty services are taxed at 5% GST, down from 18%. This covers haircuts, colouring, hair treatments, facials, manicures, pedicures, waxing, bridal makeup, and spa or massage services.
Two points to note:
No input tax credit: the 5% rate comes without input tax credit, and salons cannot choose to stay at 18% with credit instead.
How it splits: for clients in your own state, charge 2.5% CGST + 2.5% SGST.
SAC codes for your invoices:
ServiceSAC codeHairdressing and barber services999721Cosmetic treatment, manicure and pedicure999722Physical well-being services (spa, massage)999723Other beauty treatments999729
Products you sell are taxed separately. Retail products keep their own GST rates. For example, shampoo is now 5%, while most cosmetics and skincare remain at 18%. If one bill has both services and products, list each line with its correct rate.
Filing Requirements
GSTR-1 (details of sales): monthly, or quarterly under the QRMP scheme.
GSTR-3B (summary return and tax payment): monthly, or quarterly under QRMP, with tax paid monthly.
GSTR-9 (annual return): due 31 December after the end of the financial year, if your turnover requires it.
What Happened to Input Tax Credit?
Under the old 18% rate, salons could claim back the GST they paid on products, equipment, rent and marketing. With the 5% rate, that credit is no longer available on the services you provide. GST you pay on your purchases is now simply a cost.
For most salons, the lower rate makes up for the lost credit, and clients pay less on every bill. But it changes a few things:
Prices: check whether your service prices still cover your costs.
Stock bought earlier: ask your CA whether credit you claimed on stock or equipment needs to be reversed.
Retail product sales: your CA can tell you whether any credit is still available for products you sell to clients.
Common Compliance Mistakes
Still charging 18% on services after 22 September 2025.
Claiming input tax credit on services that are now taxed at 5% without credit.
Using the wrong rate for products sold alongside services.
Not issuing proper tax invoices with your GSTIN, SAC codes and tax breakdown.
Missing return deadlines. Late payment attracts 18% p.a. interest, plus late fees.
Making GST Simple with ESA
ESA's Billing Terminal calculates GST automatically on every service and product, and prints the correct invoice in seconds. Your one-click GST Report gathers your tax figures for filing, so your CA spends less time reconciling and you spend less time worrying about deadlines.
Want hassle-free GST billing for your salon? Visit elitesalonalliance.com or call +91 99116 09988.
This article is general information, not tax advice. GST rules change, so confirm the details for your salon with a qualified Chartered Accountant.