Learn about GST rates, ITC, and compliance for salons and gyms. Includes key rate reductions from the 56th GST Council meeting.
In India, a vast number of beauty parlours, gyms, and wellness centers are currently operating, with their services steadily gaining popularity. The Goods and Services Tax (GST) applies to these establishments only when their annual turnover surpasses the prescribed threshold for GST registration. This article explores various GST implications for businesses within this sector. Notably, the 56th GST Council meeting announced significant updates, effective from September 22, 2025. One key change includes a reduction in GST for beauty and well-being services, such as gyms, salons, barbers, and yoga centers, from 18% to 5%.
GST Rates for Beauty Parlours
Beauty parlours offer diverse services including haircuts, facials, grooming packages, and various skincare treatments. All these services fall under HSN Code 9997 and are subject to an 18% GST. Beauty parlours with an annual turnover exceeding the GST registration threshold but remaining below Rs. 50 lakhs have the option to choose the composition scheme, under which they pay a reduced GST of 6%.
GST Rates for Gym Services
Gyms and fitness centers provide a range of services, including periodic memberships, personal training, and specialized wellness programs. These offerings are categorized under HSN 999723 and are subject to an 18% GST rate. Similar to beauty parlours, these businesses can also opt for the composition scheme if their annual turnover surpasses the GST registration threshold but stays below Rs. 50 lakhs.
Input Tax Credit (ITC) for Beauty Salons and Fitness Establishments
Since beauty parlours and gyms are involved in the taxable supply of services, businesses registered as regular taxpayers are eligible to claim input tax credit (ITC) on raw materials and assets procured for business operations. For example, beauty parlours can claim GST paid on purchases of beauty products, cosmetics, furniture, and expenses related to rent and maintenance. Utilizing these input tax credits effectively lowers their total GST liability. However, GST-registered consumers paying for gym memberships typically cannot claim ITC on such expenses, as this is restricted under Section 17(5)(b).
GST on Cosmetics and Gym Equipment
Cosmetic products used as inputs by beauty parlours are classified under HSN Code 3303 and attract an 18% GST. Similarly, gym equipment, considered an asset for fitness centers, falls under HSN Code 9506 and is also subject to an 18% GST. These businesses are generally able to claim the GST paid on these items, provided they are acquired for business purposes.
Impact of GST on the Beauty and Fitness Industries
GST has brought several advantages to both the beauty parlour and gym sectors. These service-oriented businesses can now claim input tax credits on goods purchased for their operations. This mechanism has resulted in a reduced tax burden and improved cash flow for businesses. While compliance requirements, such as GST filing and issuing compliant invoices, have increased operational costs, these compliances ultimately foster greater trust among customers and suppliers.
