CHENNAI: Beauty parlours in the city have seen fewer footfalls this summer. Most in the business attribute this to the surge in door-to-door parlour services through various apps. Customers, too, are apprehensive because of the GST rate on beauty services, which is quite steep.
“Nothing prepared me for the bill that I got at the end of my hair colouring and hair cut session at my regular parlour,” said M Kamini, who visited an upscale parlour in the city. “The tax alone was Rs 750. I was in shock. From now, I’m going to buy the hair colour that is available in the markets. I will only get it done professionally if there is a special occasion now. GST has made the cost of services go up in addition to making customers get taxed heavily.”
Not all parlours, however, have to be registered under GST. Businesses whose aggregate turnover in a financial year exceeds Rs 20 lakhs have to register under GST. According to tax consultants, a large number of parlours in the city, barring the very small ones, exceed this threshold limit and, therefore, are liable to
be registered.
“Under the GST regime, there are two distinctions — spa and regular salons which are taxed at 18 per cent, and luxury spas and salons which are taxed at 28 per cent,” said S Ramkumar, Senior Director at Sundaram & Srinivasan, Chartered Accountants. “Earlier, under the service tax regime, it was 15 per cent on spas and regular salons, and 18 per cent on luxury spas and regular salons. Due to GST and SAC code implementation, cosmetic services are charged at 18 per cent while cosmetic products are chargeable at 28 per cent. Costs of certain services considered as ‘luxury’ treatment have gone up under the current set up. For instance, a chocolate facial will definitely cost more now than it did earlier.”
While the smaller parlours do not charge clients for GST so as to ensure competitive pricing, the cost of the products they use in the parlour has gone up.
“We don’t charge GST on the services,” said Latha Arunkumar, proprietor of Teju’s Beauty Parlour and Academy, tucked in a small residential lane in Gopalapuram. “We had tried to do it for two months but it did not go well. We had fewer clients during that period. Customers begin to feel that if they are paying GST in the smaller parlours, they might as well go to bigger ones. That’s why we did away with it and since mine is a smaller parlour, I do not have to impose GST either. But we are bearing the brunt of it because materials that used to cost Rs 7,000 now cost Rs 10,000 because of the GST.”
Besides the mushrooming of new parlours at an accessible distance, the popularity of apps that offer beauty treatment at home at discounted rates has become a pet peeve for the existing beauty parlours.
“The number of people visiting my parlour has gone down considerably,” said Angela Chang, owner of Chang’s beauty parlour in Kilpauk. “We don’t charge clients for GST so that is not the reason for the decline in our case. For one, the big parlours have outlets springing up everywhere so people who were coming from very far away to my parlour, prefer going to the parlour next door rather than travelling all the way. ”
The plethora of options available in the market for beauty products itself is making people visit parlours less frequently. “I get limited disposable income and I would rather spend it on movies and going out than to get waxing done at the parlour,” said S Anisha,* a 21-year-old city-based college student. “Everything has become so expensive that one has to think twice before doing anything. I used to get my arms and legs waxed regularly, but now I just buy a razor that’s easily available in the market, which lasts for quite a while. It is cheaper, convenient and less painful also,” she says.
NOTE: * Name changed on request