- By Iram Hussain
- Thu, 04 Sep 2025 01:43 PM (IST)
- Source:JND
GST Slashed: With the GST rate on beauty and physical well-being services such as those at health clubs, salons, barbers, fitness centres, yoga, etc., being reduced from 18 per cent with Input Tax Credit (ITC) to 5 per cent without tax credit, salon and fitness bills should become more affordable. Daily use items like toothpaste, shampoos, hair oil, toilet soap bars, and toothbrushes will also probably become less expensive because taxes on them have been reduced from 12–18% to 5%.
On September 22, the new Goods and Services Tax (GST) rate will go into effect. The Centre and states agreed to lower the GST from 18% to 5% on services related to beauty and physical well-being that the average person uses including as those provided by gyms, salons, barbers, yoga centres and other establishments as part of the rate rationalisation process at the 56th meeting of the GST Council.
GST Reduces From 18% To 5% On Wellness Services
Since GST has decreased from 18% to 5%, other everyday necessities including talcum powder, face powder, shaving cream and aftershave lotion may also see price reductions.
The finance ministry stated in a set of frequently asked questions that the rationalisation of the GST rate is "intended to lower the monthly expenditure for the lower middle class and the poorer sections of society." As a result, liquid soaps have been kept at 18 per cent while toilet soap bars have been cut to 5 per cent. In response to a query on why face powder and shampoos are exempt from GST and whether this will help multinational corporations and premium brands, the ministry stated that these products are used on a regular basis by practically every demographic.
"Although expensive face powder and shampoos sold by MNCs or luxury brands will also benefit, the objective of the rate rationalisation exercise is to further simplify the tax structure. Administering a tax based on brand or value of cosmetics will create complexity in the tax structure, besides posing challenges for administration," the ministry added.
GST slashed on several wellness services (Image Credits: Canva)
Similarly, because toothpaste, toothbrushes and dental floss are "in the nature of basic dental hygiene goods," their tax rates have been lowered to 5% while the GST rate on mouthwash has remained unchanged.
According to Rajat Mohan, Senior Partner at AMRG & Associates, the government has tried to reframe personal care and wellness as affordable necessities rather than indulgences by putting health clubs, salons, barbers, fitness centres and yoga under this 5% concessional band. "From a consumer's perspective, this should bring down costs and expand access to wellness services," he stated.
Mohan went on to explain that the new rate's lack of ITC is a crucial problem with this rationalisation.For service providers with substantial input costs on rent, consultation, consumables, and infrastructure, this means that taxes paid on inputs will no longer be creditable. This could neutralise part of the consumer benefit, as providers may still embed these costs into their pricing structures, he said.
"This reform is emblematic of a broader 'reboot mode' for the GST "This change is representative of a larger 'reboot mode' for the GST economy, a comprehensive simplification meant to completely overhaul the tax system. However, it's still unclear if the desired advantages will fully materialise. Whether or not industry participants truly pass on the lower tax burden to consumers will determine a lot. Making sure that rate cuts result in actual customer savings could be difficult without the Anti-Profiteering Authority, Mohan stated.
