Tax for hairdressers, barbers and salons in India

Salon and barbering work is a business, so use presumptive Section 44AD (6% digital, 8% other), not 44ADA. Since GST Reform 2.0 on 22 September 2025, salon and grooming services are taxed at 5% with no input-tax credit (down from 18% with credit). Registration applies at Rs 20 lakh of service turnover, and selling retail products is a separate goods supply.

Presumptive + GST + TDS at a glance

Presumptive taxation

Section:: Sec 44AD
Deemed profit rate:: 6% on digital receipts / 8% on other receipts
Classification:: business

GST treatment

Slab:: 5%
SAC:: 9997 (grooming/beauty services, 5% no ITC since 22 Sept 2025)
Composition eligible:: Yes
Reverse charge (RCM):: Not applicable

TDS exposure

Last reviewed: 29 May 2026

Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact Income Tax Department. Read our editorial scope →

Salon and barbering work in India is a business, so presumptive taxation under Section 44AD is the simplest fit, not Section 44ADA. Since GST Reform 2.0 took effect on 22 September 2025, salon, grooming and beauty services are taxed at 5% with no input-tax credit, a change from the earlier 18%-with-credit treatment. GST registration applies at Rs 20 lakh of service turnover, and selling retail products (shampoo, styling goods) is a supply of goods at the relevant goods rate.

What business structure do hairdressers, barbers and salons use?

The common patterns for hairdressers, barbers and salons are: Sole proprietor, simplest, suits most barbers and single-chair stylists on 44AD, Partnership or LLP, for a multi-chair salon sharing capital and staff, Private limited, for a salon chain or franchise. The right structure depends on revenue, liability exposure, and personal circumstances, covered below.

Income tax on a salon: Section 44AD

A salon or barbershop is a business, so presumptive taxation is under Section 44AD: a deemed 8% of turnover, or 6% on digital receipts, with no detailed books or audit within the limits, up to Rs 2 crore (Rs 3 crore where cash is 5% or less). Section 44ADA does not apply. A chair-renting stylist who only provides their own labour is still running a business, not a notified profession, so 44AD is the route.

A salon business declares deemed profit of 6 or 8% under Section 44AD; the 50% professional scheme does not apply. (Income-tax Act 1961 s.44AD (Income-tax Act 2025 s.58))

GST Reform 2.0: salon services now 5% with no input credit

From 22 September 2025, GST Reform 2.0 moved salon, hairdressing, barbering and beauty-grooming services to 5% with no input-tax credit, down from 18% with credit. The trade-off is lower output GST but no recovery of GST on rent, fit-out, equipment or consumables. The service classification sits under SAC 9997 (the older 9972 grouping is no longer used for this). You must register once service turnover crosses Rs 20 lakh.

Since 22 September 2025, salon and grooming services are taxed at 5% GST with no input-tax credit (previously 18% with credit). (CGST Act 2017 (GST Reform 2.0 rate notification, 22 September 2025); SAC 9997)

Selling products is a separate goods supply

When you sell retail products over the counter (shampoo, hair colour, styling products), that is a supply of goods taxed at the relevant goods rate, not the 5% salon-service rate. Keep service income and product sales billed separately, because they have different GST treatment and mixing them up causes return mismatches. Product sales also count towards the goods registration threshold of Rs 40 lakh.

Retail product sales are a goods supply at the goods rate, separate from the 5% salon-service rate; bill them separately. (CGST Act 2017 (goods rate notifications); registration thresholds s.22)

Allowable expenses

Category	Examples	Tax treatment
Equipment and tools	Chairs, mirrors, dryers, clippers, scissors, sterilisers	Deductible; subsumed in deemed profit under 44AD
Consumables	Shampoo, colour, wax, towels, gloves	Cost of sale; no GST input credit under the 5% service rate
Premises	Rent, electricity, water, fit-out	Deductible if keeping books; in deemed profit under 44AD
Staff wages	Stylists, helpers, receptionist	Deductible if keeping books; pay over Rs 10,000/day by bank (40A(3))
Licences and insurance	Trade licence, public liability, accountant	Deductible business expense
Marketing and admin	Booking app, social media, phone (business share)	Deductible (apportion personal phone use)

Vehicle and travel costs

A home-visit hairdresser using a vehicle can claim running costs under regular books, or rely on the deemed profit under Section 44AD which is treated as inclusive of such costs. For a fixed salon, vehicle costs are rarely material.

Capital allowances and equipment

On regular books, salon chairs, dryers and equipment depreciate in the plant-and-machinery block (generally 15% WDV). Under Section 44AD no separate depreciation is claimed, but keep invoices so the written-down value is correct on any later sale.

Worked example

Rekha — Pune, MH

unisex salon owner (services plus retail products) (2026-27)

Annual turnover Rs 30 lakh: Rs 26 lakh salon services, Rs 4 lakh retail product sales. Mostly digital. GST-registered.

For income tax, deemed profit under 44AD is 6% of Rs 30 lakh = Rs 1,80,000, below the Rs 4 lakh new-regime exemption, so income tax is nil and she files. For GST, her Rs 26 lakh of services is taxed at 5% with no input credit (so GST on rent and fit-out is not recoverable), while her Rs 4 lakh of product sales is taxed at the goods rate with the usual goods treatment. She bills services and products separately so the two GST streams reconcile cleanly.

Common audit triggers for hairdressers, barbers and salons

Claiming GST input credit while on the 5% no-credit salon-service rate
Mixing service income and retail-product sales in GST returns
Cash receipts over 5% of turnover while using the Rs 3 crore 44AD limit
Cash receipt of Rs 2 lakh or more from one party in a day (Section 269ST)
Staff wages in cash over Rs 10,000 per person per day (Section 40A(3))
No GST registration after crossing Rs 20 lakh service turnover

Frequently asked questions

Why did my salon GST drop from 18% to 5%?+

GST Reform 2.0, effective 22 September 2025, moved salon, hairdressing, barbering and beauty-grooming services to 5% with no input-tax credit. The output rate is lower, but you can no longer recover GST on rent, fit-out, equipment or consumables. Net of the lost credit, it is still generally favourable for service-heavy salons.

Should a stylist or barber use 44AD or 44ADA?+

Section 44AD. A salon, barbershop or chair-renting stylist runs a business, not a notified profession, so the presumptive scheme is the deemed 6 or 8% under 44AD, not the 50% under 44ADA. The skill involved does not turn it into a profession for tax purposes.

How are the products I sell taxed?+

Retail products you sell over the counter are a supply of goods at the relevant goods GST rate, separate from the 5% salon-service rate. Bill product sales separately from services so the two streams reconcile, and note product sales count towards the Rs 40 lakh goods registration threshold.

When do I have to register for GST?+

Once your service turnover crosses Rs 20 lakh in a financial year (Rs 10 lakh in special-category states), or Rs 40 lakh if your business is mainly product sales. Below the threshold you can stay unregistered; above it, register and charge 5% on services (no credit) and the goods rate on products.

Last reviewed: 29 May 2026