How CGST and SGST work on a salon bill that mixes services and products

Why one percentage on the bill total is the wrong sum

This is the mistake that survives longest, because the bill still looks reasonable. A salon bills a haircut and sells a styling product on the same invoice. The two do not necessarily carry the same GST rate. Applying the service rate to the whole bill understates the tax on the product; applying the product rate overstates the tax on the service. Neither error shows up until a return is filed against the totals.

• Computed per line, the bill carries ₹158 of GST and totals ₹1,758
• One flat 5% on ₹1,600 gives ₹80 of GST and totals ₹1,680
• The shortfall is ₹78 on a single bill — and it repeats on every mixed bill you issue

Do this sum with your own figures in the salon GST calculator

What GST rate does a salon charge?

Two different answers on the same bill, and both changed on 22 September 2025. Salon and spa services — hair, beauty, spa and fitness, the whole of SAC group 99972 — went from 18% to 5%, and that 5% comes with a condition: it applies only where you have not taken input tax credit on the goods and services used to provide it, and paying 18% instead to keep the credit is not an option. Retail products follow their own HSN code, and those did not all move together.

• The 5% on services is mandatory — 18% with input credit is no longer available
• Input tax credit on what you buy to provide the service is not available at that rate
• A product's rate follows its HSN code, which is why one bill still carries two rates
• Rates move — check the current notification before relying on any figure here
• The notification names the group, not the six-digit code; the codes come from the classification annexed to it

CGST and SGST, or IGST — which one applies?

It depends on where the supply happens, not on what you sold. For an intra-state supply — the ordinary case for a salon serving walk-in customers in its own state — the GST rate is split into two equal halves, one going to the centre as CGST and one to the state as SGST. The 5% on a service becomes 2.5% CGST plus 2.5% SGST; an 18% product line becomes 9% and 9%. For an inter-state supply the whole rate is charged once as IGST and is not split.

• Intra-state: rate ÷ 2 as CGST, rate ÷ 2 as SGST, both on the same taxable value
• Inter-state: the whole rate as IGST, no split
• The split is on the tax, never on the taxable value
• An odd rupee has to land somewhere — CGST and SGST must still sum to the exact tax

Inclusive or exclusive pricing: same rate, two different bills

A salon that advertises a ₹1,000 haircut usually means the customer hands over ₹1,000. That is tax-inclusive pricing, and the tax has to be backed out of the price rather than added to it. Retail products are more often priced exclusive, with tax added on top. The rate is identical in both cases; the arithmetic is not, and a system that only understands one of them will quietly misprice the other.

• Inclusive taxable value = price ÷ (1 + rate), so ₹1,000 ÷ 1.05 = ₹952.38
• The customer pays the advertised price and the salon absorbs the tax out of it
• Services and retail products often need opposite settings on the same bill

Where do discounts belong in the order of operations?

Before tax, and allocated across the lines rather than subtracted from the total. A ₹200 discount on the mixed bill above is not ₹200 off the final figure — it reduces the taxable value of the lines it applies to, which reduces the tax those lines carry. Applying the discount after tax charges the customer GST on money they never paid, and the difference is real money in both directions.

• Allocate the discount across lines first, then compute tax on what each line actually charged
• A bill-level discount has to be apportioned; a line-level one already knows where it belongs
• Coupons and loyalty redemptions are discounts for this purpose and follow the same order
• Round once, at the end, on the grand total — not line by line

Why the tax has to be stored on the invoice, not recalculated

Rates change. Branches switch from exclusive to inclusive pricing. A category gets reclassified. If a bill recomputes its tax every time it is opened, then last year's invoice quietly starts disagreeing with the return you already filed against it, and with the printed copy the customer is holding. The tax charged is a fact about a transaction that happened, so it belongs on the invoice as a stored value.

• Compute at the moment of issue, then store CGST, SGST, IGST and the taxable value per line
• A rate change next year cannot reach backwards into a bill already issued
• Reports over past periods keep matching the paperwork the customer was given
• An edited bill should correct in place against its original number, not spawn a second one

How Salvoro does it

Salvoro computes tax per line against each line's own category settings, allocates discounts proportionally across lines before tax, splits intra-state tax into equal CGST and SGST halves, and stores the computed tax on the invoice. Money is held in paise as integers rather than floating-point rupees, so the two halves of a split always add back to the exact tax with no lost paisa. Tax settings are set per company and can be overridden per branch — a branch in another state gets its own rates, and a branch that overrides nothing inherits.

• Independent rates and price types for services, products and memberships
• Per-branch overrides, inheriting from the company where unset
• A per-branch GST summary report for filing
• Invoices printable, downloadable as PDF, or sent as a link the customer opens on their phone

See the salon billing software that does this at the till