GST for Gyms, Salons and Spas in 2026: 5% Without Input Tax Credit, What It Does to Your Costs, Products and Registration

GST for gyms, salons and spas is now 5% without input tax credit, down from 18%, which changes both the bill to customers and the owner's costs.

Tejasbhai runs a gym in Rajkot and his wife a salon next door. Both used to charge 18% GST and claim credit on equipment, rent and the franchise fee. Since the rate cut, members pay less, but the GST on the new treadmills, the rent and the brand royalty can no longer be claimed, and their accountant is still billing some packages at the old rate.

The rate change from 22 September 2025 was meant to make fitness and grooming cheaper. For owners, it also turned GST on their costs into a cost. Here is how it works in 2026.

In short: Services of gyms, fitness centres, health clubs, yoga centres, salons, barbers, beauty parlours and spas are taxed at 5% without input tax credit since 22 September 2025, instead of 18% with credit. GST you pay on equipment, rent, franchise fees and products used in the service can no longer be set off, so price it into your fees. Products sold separately, such as supplements, shampoos and creams, are taxed at their own rates. GST registration is needed once turnover crosses Rs 20 lakh a year, GST on annual memberships is due when the money is received, and the business is taxed under income tax as a business, where the presumptive scheme can help smaller units.

Our team handles GST registration, billing, returns and income tax for gyms, salons and spas. The details are at the end of this guide.

What is taxed at 5%

• Fitness: gyms, fitness centres, health clubs and yoga centres.
• Grooming and beauty: salons, barbers, beauty parlours and spas.
• No credit: the 5% rate comes without input tax credit, so GST charged by your suppliers stays a cost.
• From 22 September 2025: bills for services after that date carry 5%. Advances received earlier for later services need care, because the date of payment and the date of the invoice decide the rate.

What the rate cut means for your costs

• Equipment: GST on treadmills, chairs, dryers and spa beds can no longer be claimed.
• Rent and franchise fees: GST on shop rent and the brand royalty is now a cost.
• Products used in services: GST on hair colour, creams and consumables used for clients is not recoverable.
• Price it in: work out your new cost per member or per client before you revise rates, so the cut does not come out of your margin.
• Old credit: credit already sitting in your ledger from before the change, and credit on stock held, needs to be reviewed for reversal.

Products sold over the counter

• Separate rates: supplements, protein powders, shampoos, creams and accessories sold to customers are goods, taxed at their own rates.
• Separate bills: show products and services as separate lines, so each carries the right rate.
• Packages: a package that mixes services and products is taxed by its main element, which can lead to disputes. Clear bills avoid them.

Registration, memberships and returns

• Registration: needed once turnover crosses Rs 20 lakh a year in Gujarat. See do I need GST registration.
• Annual memberships: GST is due when the payment is received, even for a year-long plan.
• Returns: GSTR-1 and GSTR-3B every month or quarter. See our GST return calendar.
• Background: our guide to GST 2.0 explains the wider rate changes.

Income tax, staff and licences

• Presumptive tax: smaller gyms and salons can declare 6% of digital and 8% of cash turnover as profit, within the limits. See presumptive taxation.
• Staff: trainers, stylists and therapists on the payroll bring PF and ESIC once you cross the employee limits. See PF and ESIC registration.
• Shop registration: Gujarat's shop and establishment rules apply to your premises. See shop and establishment registration.

Back to Tejasbhai. The gym and the salon now bill services at 5%, with supplements and hair products on separate lines at their own rates. Their accountant works out the GST on rent, equipment and the franchise fee as a cost and builds it into the new membership and service rates. Annual memberships are reported in the month they are paid, and both businesses file their returns on time.

How we help

• GST registration and the right rate for services and products
• Bill formats, membership and package billing
• Review of credit in your ledger after the rate change
• Monthly GST returns and reconciliation
• Income tax, presumptive or regular accounts
• PF, ESIC and shop registration for your staff and premises

Gadhia Associate has been in practice since 2007 and has handled work for over 7,000 clients, with a 5.0 Google rating from more than 100 reviews. Gyms, salons, spas and other service businesses from Junagadh, Rajkot, Jamnagar and Gondal come to our Junagadh office, where same-day appointments are available. Work for businesses elsewhere is handled online.

Still billing at the old rate, or unsure about your costs after the GST cut? Get it checked this week. Call or WhatsApp +91 82005 28355, or message us on WhatsApp. The first consultation is free.

Frequently asked questions

What is the GST rate on gym membership in 2026?

5% without input tax credit, since 22 September 2025.

What is the GST rate on salon and spa services?

5% without input tax credit, for salons, barbers, beauty parlours and spas.

Can a gym claim input tax credit on equipment?

No. At the 5% rate, credit on equipment, rent and other inputs is not available.

Is GST charged on products sold at a salon or gym?

Yes, at the rate that applies to each product, shown separately on the bill.

When does a gym or salon need GST registration?

Once its turnover crosses Rs 20 lakh in a year in Gujarat.

Is GST on an annual gym membership due at once?

Yes. GST is due when the membership fee is received.

Position as of 20 October 2026. Rates are as notified from 22 September 2025. Packages and mixed bills depend on the facts, so take advice on your own billing.