With GST on salon services revised from 18% with ITC to 5% without ITC, BWAI highlights how the customers truly benefit and how businesses face added compliance and operational challenges. Read along to understand better.
The Beauty & Wellness Association of India (BWAI), the apex body representing leading salon and wellness brands across the country, has issued a statement on the recent revision of the Goods & Services Tax (GST) and its implications on service pricing within the beauty and wellness industry.
As per the new structure, GST on salon services has gone down from 18% with input tax credit (ITC) to 5% without ITC. At first look, this seems to be a significant 13% reduction for customers. However, the BWAI clarifies that the practical implications are different.
Impact on customer pricing
Earlier, a service priced at ₹100 attracted 18% GST, making the final bill ₹118.
With the revised structure, since ITC is no longer available, the base price of services must increase by approximately 10% to cover the Input Tax Credit on operational costs. This raises the service to ₹110, and with 5% GST applied, the final bill becomes ₹115.5.
This means the effective benefit to customers is only around 2.5%, not the 13% reduction it may initially appear to be.
Operational changes for businesses
The removal of ITC also requires salons and wellness providers to separately track and report service and product revenues for compliance and tax optimisation. While this adds complexity to business operations, it ensures greater fairness and transparency across the industry.
BWAI’s position
As the unified voice of the beauty and wellness sector, BWAI is committed to ensuring that customers are well-informed about the actual impact of the GST revision. The association also continues to work with policymakers to create an environment that supports both affordable services for consumers and sustainable growth for businesses.
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