01
Before You Sign the Lease
The one decision you cannot cheaply undo. What the premises has to physically support before a trade, health or fire clearance is possible, and the lease clause worth negotiating on day one.
How to Open a Salon or Spa in India: A Free Setup Guide
Eleven pages, ordered by what blocks what rather than by topic. The premises checks you cannot undo after signing, the September 2025 GST change and what it really did to your margin, and every licence named with the office that issues it. Updated August 2026.
- The 5% GST change explained properly, with the arithmetic to work out whether you are actually better off
- Every licence named with who issues it, and no invented fees, because they are state and municipal subjects
- Stage by stage, so you know what has to be settled before you sign the lease
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Petpooja presents
Opening a Salon or Spa in India
For Indian Salon & Spa Owners
7
Stages · PDF guide
Updated Aug 2026
What's Inside
The seven stages, in the order the decisions arrive
02
Registering the Business
Entity, PAN and TAN, current account, Shop and Establishment, Udyam. What each one gates downstream, and the order that avoids doing any of it twice.
03
The GST Decision
5% without input tax credit since 22 September 2025. What the change did to your margin, and a worked comparison of passing the cut on against holding the customer's total.
04
Licences Before You Open
Shop and Establishment, trade licence, health clearance, fire clearance, signage and music. Who issues each one, what it governs, and why no honest guide can print a national fee for any of them.
05
Before You Hire
ESI, EPF and Professional Tax switch on at headcounts owners cross without noticing, and the ESI number is not the same in every state. Plus where the new Labour Codes have landed.
06
Pricing, Billing and Year One
Costing a service from the chair rather than from the salon next door, what a compliant bill has to carry, and the eight mistakes that cost real money in the first year.
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Why This Matters
The Advice You Will Find Online Is Mostly Invented
Search for how to open a salon in India and you will be given a confident list of licences, each with a price next to it. Almost none of those prices are real, because there is no national salon licence and no national fee to quote.
Shop and Establishment registration is a State subject and the fee commonly scales with your headcount. Trade and health licences come from your municipal corporation and commonly scale with floor area. A figure without a State, a corporation and a financial year attached to it is not a figure, it is a guess someone published. This guide names every permission and the office that issues it, and prices none of them.
The one thing that did change nationally, and that most salon owners have been told wrongly, is GST. On 22 September 2025 beauty and physical well-being services moved from 18% to 5% without input tax credit. It has been reported almost everywhere as a straightforward tax cut. It is a rate cut and a withdrawal of input tax credit in the same move.
That distinction decides real money. GST sits on top of your price, so when the rate falls it is the customer's total that falls, not your revenue. The saving belongs to the customer unless you deliberately reprice to capture it. The lost input credit on your rent, your fit-out and your consumables is yours in either case. Most salons have quietly passed the benefit on without ever deciding to, because the billing software changed the rate and nobody changed the price.
This guide works that arithmetic through with a salon on ₹4,00,000 of monthly service revenue, so you can run your own numbers rather than take anyone's word for it, or check them against a free GST calculator. Everything else is ordered the way the decisions actually arrive, starting with the only one you cannot undo cheaply: the lease.
Sample Preview
The GST arithmetic for a salon on ₹4,00,000 a month
Here's a preview of what you'll get inside:
Before 22 Sep 2025: you billed ₹4,00,000 plus 18%, the customer
paid ₹4,72,000, and you claimed input credit on rent, services and stock
Option A, pass the cut on: customer now pays ₹4,20,000, your
revenue is unchanged, and the credit is gone. Worse off by roughly ₹30,000 a month
Option B, hold the customer's total: pre-tax price rises to
₹4,49,524, the customer still pays ₹4,72,000 and notices nothing
Net effect of Option B: ₹49,524 more revenue, less about
₹30,000 of lost credit. Better off by roughly ₹19,500 a month
Where the ₹30,000 comes from: assumed GST on rent and input services at
18%, and on products bought in at 5%. Substitute your own figures
Illustration with assumed figures, worked in full inside the guide so you can
substitute your own rent and purchases.
Key Stats
The three numbers to get right first
5%
GST on beauty and physical well-being services, which covers salons, barbers, spas and health clubs. The FAQ gives the rate as 5% without input tax credit, so the credit you used to claim on rent, fit-out and consumables no longer offsets it.
Source: Ministry of Finance FAQ on the decisions of the 56th GST Council, question 72, posted 03-Sep-2025₹20 lakh
Aggregate turnover at which GST registration becomes compulsory, and ₹10 lakh in special category States. The ₹40 lakh figure you will see quoted is available only to a supplier of goods exclusively, which a salon is not. Registration gives you a GSTIN.
Source: Section 22(1) and its provisos, Central Goods and Services Tax Act, 201722 Sep 2025
The date the new rates took effect for goods and services. If your price list has not been revisited since, the entire benefit of the rate cut has gone to your customers by default.
Source: Ministry of Finance FAQ on the decisions of the 56th GST Council, question 1, same document
Common Mistakes
9 Mistakes That Cost Money in Year One
01
Signing the lease before checking what the premises can legally become
First in time and largest in cost. Trade, health and fire clearances are granted against a specific address and carry physical conditions. If the building cannot meet them, no paperwork fixes it and the landlord has your deposit.
02
Assuming the ₹40 lakh GST threshold applies to you
It is available to a supplier engaged exclusively in the supply of goods. A salon supplies services, and selling shampoo at the counter makes you a supplier of both rather than an exclusive supplier of goods. Your number is ₹20 lakh.
03
Reading the 2025 rate cut as pure good news
5% instead of 18% is genuinely lower for the customer. Without input tax credit it is not automatically better for you. Run the arithmetic against your own rent before you decide whether to reprice.
04
Letting the billing software reprice the business for you
When the rate changed, most systems simply started charging 5% on the same pre-tax price. That hands the entire saving to the customer. It is a legitimate choice, but it should be a choice.
05
Paying whoever turns up asking for a music licence
The requirement to be licensed is not in doubt. Who may issue the licence for sound recordings is currently before the Supreme Court. Ask for authority in writing and take advice before signing anything long.
06
Crossing a headcount threshold without noticing
ESI and EPF switch on at a headcount, and part-timers and trainees may count towards it. The ESI threshold is not the same in every State, and the labour law compliance checklist maps the monthly deadlines. Registering after the fact comes with arrears.
07
Treating package and membership money as revenue
A package sold today is a service you still owe. Counting it as earned makes the first year look good and the second year look inexplicable.
08
Pricing off the salon next door
Their rent, their credit position and their product mix are not yours. Cost your own chair.
09
Letting renewals lapse
Trade licence, health clearance, fire clearance and Shop and Establishment renew on different cycles from different offices. Nothing reminds you. Diarise each one on the day it is issued.
Comparison
Typical online advice vs this guide
| Aspect | What you usually get | What this guide does |
|---|---|---|
| Licence fees | A confident national price list | No fees at all, because they are set by each State and corporation. Every permission is named with the office that issues it |
| The 2025 GST change | "Good news, 18% is now 5%" | Quoted from the Ministry of Finance FAQ, with the credit withdrawal and the repricing decision worked through |
| Registration threshold | ₹40 lakh, quoted from goods rules | ₹20 lakh, with the proviso in Section 22(1) that explains why ₹40 lakh is not yours |
| Music licensing | "Get a PPL licence" | The position is unsettled and before the Supreme Court. The guide says so and tells you what to ask for instead |
| Order of the content | Grouped by topic | Ordered by stage, so the irreversible decisions come before the recoverable ones |
| Sourcing | Unattributed, and often copied between blogs | Every number carries the document it came from, named in the text so you can check it |
| Spa services | Treated as identical to a salon | Covered where the rules are the same, and flagged where therapeutic and massage services carry extra State requirements |
Swipe the table sideways to see the full comparison.
Open with the right numbers
Eleven pages, sourced to the documents, ordered by what blocks what. Free download.
FAQ
Frequently asked questions
What GST rate does a salon or spa charge in India?
5%, without input tax credit. The Ministry of Finance FAQ on the decisions of the 56th GST Council states at question 72 that beauty and physical well-being services, including health clubs, salons, barbers, fitness centres and yoga, attract GST at 5% without ITC, and that these services attracted 18% earlier. The change took effect on 22 September 2025.
Can a salon still claim input tax credit on rent and equipment?
Not on the service side. The Ministry of Finance FAQ gives the rate for these services as 5% without ITC, so the credit you used to claim against your output liability no longer offsets it. If anyone tells you an 18%-with-credit route still exists for a salon, ask them to point to the entry in the rate notification before you rely on it. If you also sell retail products, credit has to be apportioned rather than claimed in full, and that calculation is one to do with your accountant using your actual revenue split before your first return.
When does a salon have to register for GST?
Section 22(1) of the CGST Act, 2017 requires registration once aggregate turnover in a financial year exceeds ₹20 lakh, and ₹10 lakh for suppliers in special category States. The ₹40 lakh figure that appears in most search results sits in a proviso allowing a higher threshold for a supplier engaged exclusively in the supply of goods. A salon supplies services, so ₹40 lakh is not available to it. The GST registration checklist lists the documents you will be asked for.
What licences do I need to open a salon in India?
There is no single national salon licence. In most cases you will need Shop and Establishment registration from the State labour department, a trade licence and a health or sanitary clearance from your municipal corporation, fire clearance from the State fire service, and permission for your signage. A spa offering therapeutic or massage services should expect additional State-level requirements. Your obligations as an employer now sit under the four Labour Codes. Fees are set by each State and corporation, so get the current schedule from your own corporation rather than from a national list. Once you are open, the salon and spa daily operations checklist covers the running of it.
Do I need a music licence to play music in my salon?
Playing recorded music to customers is a communication to the public and requires a licence. Who is entitled to issue that licence for sound recordings is currently unsettled. In Azure Hospitality Private Limited v. Phonographic Performance Limited, FAO(OS)(COMM) 41/2025, pronounced on 15 April 2025, a Division Bench of the Delhi High Court took the view that PPL could not grant such licences without being a registered copyright society or a member of one. The Supreme Court stayed part of that judgment on 21 April 2025 and the matter is pending. Budget for a licence, but ask which entity is demanding payment and on what authority, and take advice before signing anything long.
About Petpooja
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