Billing is the part of running a salon that nobody enjoys, and GST is the part of billing that causes the most worry. This guide covers what salon and spa owners in India need to know: the rate on services, registration, what goes on an invoice, how to number bills, and the mistakes that cause trouble at filing time.
This is a practical overview, not tax advice. It reflects the rules as we understand them in October 2026. GST rules change, so confirm anything you act on with your chartered accountant.
The GST rate on salon services
From 22 September 2025, following the 56th GST Council meeting, beauty and physical well-being services, a group that covers salons, barbers, spas, health clubs, fitness centres and yoga, are taxed at 5% without input tax credit. Before that they were taxed at 18% with input tax credit.
Two things follow from "without input tax credit":
- You can't offset the GST you pay on inputs used for these services. GST on products used during services, on rent, on equipment and so on becomes a cost rather than a credit.
- The 5% rate isn't optional. The government's FAQs on the change say providers of these services cannot choose to charge 18% and claim credit instead.
If you also make other taxable sales, such as retail products, credit on inputs used for both has to be split between them. This is exactly the kind of thing to set up properly with your CA once.
Products you sell are taxed separately
Shampoos, serums, hair colour and skincare sold over the counter are goods. They're taxed at the rate for each product's HSN code, not at the rate for salon services. Rates for several personal-care items also changed in September 2025, so check each product's current rate instead of copying last year's settings. On a bill with both services and retail products, each line should carry its own rate.
A practical tip: keep retail stock and "back-bar" stock (products used during services) separate in your records. It makes the input tax credit question far easier for your accountant.
Do you need to register?
A business supplying services must register for GST once its aggregate turnover in a financial year crosses ₹20 lakh, or ₹10 lakh in some special category states. You can also register voluntarily below that; your CA can tell you whether it makes sense for you.
Smaller service providers can look at the composition scheme for services: turnover up to ₹50 lakh, tax at 6% of turnover, no tax collected from clients and no input tax credit. Now that salon services are at 5% under the regular scheme, compare the two carefully with your CA before choosing.
What a GST invoice must show
Under the GST invoice rules, a tax invoice needs, among other things:
- Your name, address and GSTIN
- A consecutive invoice number of up to 16 characters, unique for the financial year
- The date of issue
- A description of each service or product, with its SAC or HSN code (how many digits you must show depends on your turnover)
- The taxable value, after any discount
- The tax rate and the amount of CGST and SGST, or IGST for an inter-state supply
- The place of supply
- Your signature or digital signature, or that of an authorised representative
For clients who aren't registered for GST, their name and address only have to be on the invoice when the taxable value is ₹50,000 or more. If a business client gives you their GSTIN, put it on the invoice.
Bill numbering: one series per financial year
Invoice numbers must run in a consecutive series that is unique for each financial year (April to March). In practice that means no unexplained gaps, no duplicates, and either a fresh series from 1 April or a series with the year built in, such as "SAL/26-27/0001". If you run more than one branch, give each its own series so numbers never collide. Handwritten bill books make all of this harder than it needs to be.
Discounts and prepaid wallets
- Discounts: a discount given at the time of the service and recorded on the invoice reduces the taxable value, so GST is worked out on the price after the discount. A discount given verbally and not shown on the bill doesn't.
- Prepaid wallets and memberships: how GST applies when you sell prepaid credit, and when it is used, depends on how the package is structured. Agree the treatment with your CA before you launch memberships. It's far easier than fixing it later. Our article on salon membership and prepaid package ideas covers the commercial side.
Prices: inclusive or exclusive of GST?
Decide whether your menu prices include GST, and be consistent. Clients generally expect to pay the price on the menu, so showing tax-inclusive prices and letting the invoice break out the tax avoids surprises at the counter. Whichever you choose, make sure the menu, your billing system and the invoice agree.
Taking payment: cash, UPI, card and split bills
Clients often want to pay one bill several ways: part UPI, part card, part from a membership wallet. Record each method on the bill. At the end of every day, match the cash in the drawer to cash on bills, and your UPI and card totals to the bank and terminal statements. Small differences caught daily are easy to explain. A month of them isn't.
Filing and records
- Regular taxpayers file GSTR-1 (outward supplies) and GSTR-3B (summary return with tax payment). Businesses with turnover up to ₹5 crore can opt for quarterly returns with monthly tax payments under the QRMP scheme.
- Keep your accounts and records for 72 months from the due date of the annual return for the year they relate to.
- Export your sales register regularly, by day, branch and payment method, and share it with your accountant in a format they can work with.
Common billing mistakes in salons
- Still charging 18% on services, or still claiming input tax credit on service inputs after September 2025.
- One GST rate applied to every line, including retail products.
- Handwritten bills with gaps or duplicate numbers.
- Discounts given verbally and not shown on the invoice.
- Wallet and membership sales with no record of the balance still owed to clients.
- No daily reconciliation of cash and UPI.
How SpotBay helps
SpotBay's salon billing software takes care of the mechanics at the counter:
- GST invoices with your GSTIN, and a GST rate and HSN code on each product.
- Bill numbers in a pattern you set, reset each financial year, with numbering per branch or shared.
- Split payments: up to three payment methods on one bill, including the client's membership wallet.
- Printing on 58mm or 80mm thermal paper, or A4. On Android, the POS app prints to Bluetooth thermal printers.
- Sales exports to Excel, CSV or PDF for your accountant.
- Memberships and wallets that report gross sales, promo cost and net revenue separately.
Billing is one part of SpotBay's salon and spa software, alongside booking, memberships and WhatsApp follow-ups. Whatever system you use, sit down with your CA once to set the right rates, codes and series, then let the software apply them on every bill.