How to start a salon or spa in India: registrations and licences

Choosing a structure

Single-outlet salons commonly run as proprietorships. Chains, franchises and premium spas usually form LLPs or private limited companies to sign leases, take investment and manage multiple outlets. Franchisees need their own entity and registrations even when using a national brand.

Each outlet needs its own local licences, and outlets in different states need separate GST registrations, so plan the structure with expansion and franchising in mind from the start.

Licences for salons and spas

Salon licensing is mainly municipal. Spas offering massage therapies face extra scrutiny in several cities, where police or municipal guidelines set conditions on premises, staff and operating hours.

GST on salon services and products

Beauty and physical well-being services moved from 18% with credit to 5% without credit on 22 September 2025. This covers hair, skin and beauty treatments. Because credit is not allowed, GST paid on rent, furniture and professional products used in services becomes a cost.

Retail sales are separate. Shampoo, hair oil, soap and talcum powder moved to 5% on the same date, and other cosmetics follow their HSN rates. Bill services and retail products on separate lines so each is taxed correctly and you can claim credit on goods bought for resale.

Hygiene, safety and staff

Municipal health licences often come with hygiene conditions: sterilisation of tools, disposal of sharps and waste, clean water and ventilation. Keep records of sterilisation and product batches, especially for chemical treatments like hair colouring or peels, in case of customer complaints.

Salons employ many staff on commission. Register for professional tax where applicable, and for ESIC once you have 10 employees and EPF at 20. Minimum wage rules under the Code on Wages apply to employees regardless of commission arrangements.

Ongoing compliance

Renew trade and spa licences on time and display them at the outlet. File GST returns, track product inventory, and deduct TDS on rent where required. If you sell gift cards or packages, account for advances correctly for GST.

Customer data such as phone numbers and treatment history is personal data; the DPDP Rules 2025 obligations, including security and breach reporting, apply from 13 May 2027.

Franchise and booth rental models

Many salon brands grow through franchising. The franchisee runs the outlet, holds the local licences and GST registration, and pays royalty and fees that attract 18% GST. The franchise agreement should specify brand standards, product sourcing, training and what happens to customer data if the franchise ends.

Some salons rent chairs to independent stylists. In that case, the salon earns rent or a service fee, and the stylist supplies services to customers. Clarify in writing who bills the customer, who charges GST and who is responsible for licences, since inspectors look at the outlet as a whole.

Pitfalls for salon owners

Spa licensing in particular can involve police verification and premises conditions, so check local rules before fitting out treatment rooms. Get the local rules in writing from the licensing office if guidance is unclear.

• Charging 18% and claiming credit on services after September 2025.
• Opening a spa without checking city-specific licensing rules.
• Mixing retail product sales into service bills.
• Paying commission-only staff below minimum wage.

Step by step

1. 1Choose the entity

   Proprietorship for one outlet; LLP or company for chains.

2. 2Secure premises

   Check commercial use permission and fire safety needs.

3. 3Local licences

   Shop and establishment, trade or health licence, and spa licence where applicable.

4. 4Register for GST

   Register when turnover nears ₹20 lakh and bill services at 5%.

5. 5Set up billing

   Separate service and product lines with correct rates.

6. 6Payroll setup

   Professional tax, ESIC and EPF as staff numbers grow.

7. 7Protect the brand

   File a trademark if you plan to expand or franchise.