Service Tax for Beauty Parlour

Beauty parlor offers services like hair cut, rejuvenation services, pedicure, manicure, hair styling so on and so forth which fall under the service tax coverage. Beauty parlor are therefore liable to pay service tax on the services offered within the parlour. In this article, we look at service tax levy on a beauty parlour business in India. There is also more information available about how to start a beauty parlour in the IndiaFilings Learning Center.

Beauty treatment

As per the Service Tax Act, taxable service in relation to a beauty parlour means any service provided or to be provided to any person, by a beauty parlour in relation to beauty treatment. Beauty treatment includes hair cutting, hair dyeing, hair dressing, face and beauty treatment, cosmetic treatment, manicure, pedicure or counseling services on beauty, face care or make-up or such other similar services. Currently, service tax of 14% is chargeable on beauty treatment services provided by a beauty parlour in India.

Cosmetic products used for providing beauty services

For providing beauty treatment, beauty parlours use cosmetics and toilet preparations. Often, beauty parlour owners question whether if such cosmetics and toilet preparations be billed separately or if abatement is provided on the service tax amount – based on the cosmetics and toilet preparations consumed.

The service tax department has clarified that these materials are essential for providing the beauty service and they are not sold as such but used for treatment such as facials etc.  Therefore, they are integral to the service provided.  Hence service tax is chargeable on the gross amount and no abatement is admissible on account of the value of material consumed in providing the service.

Cosmetics sold in a beauty parlour

In addition to beauty services, beauty parlours often sell cosmetics or toiletries in retail.  Service tax would not be applicable on products sold. Hence, VAT would only be applicable as per the relevant state regulations.

Service tax exemption for small scale service providers

Beauty parlours which have an annual taxable services billing of aggregate value not exceeding ten lakh rupees in any financial year are not required to collect or pay service tax. However, the exemption is not applicable for those businesses that operate a beauty parlour under a brand name or trade name,  whether registered or not, of another person. Hence, franchise beauty parlours or salons are not allowed to claim service tax exemption under this scheme.

Tax registrations required for beauty salon

Any beauty parlour that is a franchisee or any beauty parlour that would have an annual taxable services billing of more than Rs.9 lakhs in any financial year must obtain service tax registration. Service tax registration can now be obtained easily online through IndiaFilings.com

In addition to service tax registration, those beauty parlours that sell cosmetics or toiletries must obtain VAT registration from the sales tax department. VAT is applicable on cosmetic and toiletry products. Hence, Value Added Tax (VAT)  must be included in any sales of product happening within the beauty parlour.