Just when the beauty industry was getting back on track after demonetisation, the announcement of 28 per cent GST (Goods and Services Tax) on cosmetics and 18 per cent on services provided by salons has seen a considerable decline within the first week of its implementation.
What adds to it is the fact that the country is also gearing up to celebrate major festivals in the coming months. Says beautician Nishi Mulchandani who owns a beauty salon in the central suburbs, “People are enquiring by how much we have increased our rates. We haven’t seen a dip in customers yet as we are still figuring out the revised prices for our services.”
Sales may see a downfall
Ajay Kumar Shaw, who owns a cosmetic store, feels that with the wedding season also around the corner, their business might take a huge hit. He says, “Earlier, there was a 14.5 per cent tax on cosmetics. From that to 28 per cent is an enormous hike. Our sales will definitely nosedive this season.”
Seconding him is Swati Mehta, who owns a beauty store in South Mumbai. She adds, “As soon as the news of GST spread, we decided to put our products up on sale till May 30, so that after implementation, we could get the new cosmetics at the revised prices. But that did not happen. We are still trying to sell off our old products at the previous rates.”
High demand + old supplies = customer dissatisfaction
While sellers are trying to sell their old products, they say that there is a scarcity in the market because the new products haven’t been dispensed yet.
Shaikh Mohammad, who has a cosmetic store in Crawford Market, says, “The demand for cosmetics, especially compact powder, liquid foundation, lipstick and kajal are quite high. But most stores have old cosmetics stocked, which the customers are refusing to buy.”
Mother-daughter duo, Mithila Verma (advertising professional) and Sharmistha Verma (housewife) decided to go shopping for household beauty must-haves and were shocked to find old products being sold to them. “The store that we regularly go to in Fort, had shampoo bottles with manufacturing dates of April and May 2016 printed on them. The same was the case with hair oils, which were being sold at a higher price than its original MRP. We don’t mind paying the 18 per cent GST, but how can we take home products which have passed their expiry dates?” questions Mithila.
Beauticians and make-up artists will feel the heat
It isn’t only the beauty products that has taken a setback. Joana Shah, who purchases cosmetics on bulk for her beauty salon, says, “If I buy a lipstick for `350 after paying GST, I will have to sell that for `400 to the customer. I end up making a profit of only `50 on the total cost, whereas earlier I would easily make a profit of `100-150 on the same product.”
And it doesn’t end there. Make-up artists in the city are also facing the heat due to GST. Talking about the increase in the remuneration that make-up artists are charging now, Meghna Butani, make-up professional says, “Earlier, I used to charge a 15 per cent service tax. Now, even if the tax has gone up to 18 per cent, it gets nullified as there are many clients who insist on cash dealing, which goes unbilled.”