Salon and fitness bills are likely to get cheaper as the GST rate on beauty and physical well-being services, including those at health clubs, salons, barbers, fitness centres, yoga, etc., has been slashed from 18 per cent (with Input Tax Credit) to 5 per cent (without tax credit).
Also, daily-use products like hair oil, toilet soap bars, shampoos, toothbrushes, toothpaste are expected to become more affordable as taxes on them have been cut to 5 per cent from 12/18 per cent currently.
The new GST rate will take effect from September 22. During the 56th GST Council meeting, both central and state governments agreed to reduce GST from 18 per cent to 5 per cent on essential beauty and wellness services used by the general public.
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Other everyday items like talcum powder, face powder, shaving cream, and aftershave lotion, could also see reduced prices as their GST rate has been lowered to 5 per cent from 18 per cent.
Issuing a set of FAQs, the finance ministry clarified that the GST rate rationalisation aims to “lower monthly expenditure for the lower-middle-class and poorer sections of society.” While toilet soap bars are now taxed at 5 per cent, liquid soaps remain at 18 per cent.
Addressing concerns about whether the reduced rates would disproportionately benefit MNCs and luxury brands, the ministry explained that these goods are daily-use items across demographics. “Administering a tax based on brand or value of cosmetics will create complexity … and pose challenges for administration,” it added.
Rajat Mohan, Senior Partner at AMRG & Associates, noted that by including health clubs, salons, barbers, fitness centres, and yoga under this concessional bracket, the government is repositioning personal care and wellness as accessible essentials rather than luxuries. “From a consumer’s perspective, this should bring down costs and expand access to wellness services,” he said.
However, Mohan also flagged a crucial issue: the new rate comes without Input Tax Credit (ITC). For service providers with high input costs—such as rent, consultation fees, consumables, and infrastructure—this could mean taxes paid on inputs won’t be creditable. Consequently, some providers may embed these costs into their pricing, potentially diminishing the intended consumer savings.
“This reform represents a broader ‘reboot mode’ for the GST economy, a sweeping simplification meant to reset the tax landscape. Yet whether the benefits fully materialise remains uncertain—it hinges on whether industry players actually pass on the reduced tax burden to customers. With the Anti-Profiteering Authority not in operation, ensuring real consumer savings may pose a challenge,” Mohan added.
