5% GST on salons, gyms and yoga classes mandatory from September 22, says CBIC

Planning to book a salon appointment, gym session or yoga class after September 22? Your bill will look different as the Central Board of Indirect Taxes and Customs (CBIC) has clarified the new GST rates for beauty and physical well-being services.

In its latest clarification, CBIC said that a 5% GST without input tax credit (ITC) will be applicable on services such as salons, gyms, spas and yoga classes. The earlier option of charging 18% GST with ITC will no longer be available.

"The 5% without ITC rate on beauty and physical well-being services is mandatory. Service providers do not have the option to charge 18% with ITC on these services,” the CBIC stated.

The change is expected to reduce the tax burden for consumers, as most wellness services that previously attracted higher rates will now fall under the lower slab. However, businesses in the sector will not be able to claim input credit on taxes paid for their purchases.

Industry watchers say the move could bring cheer to consumers ahead of the festive season, while service providers may need to recalibrate pricing models to absorb the impact of losing ITC.