Man surprised to be charged GST for haircut at Tampines salon

Submitted by Stomper Oo

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Goods and services tax (GST) for a haircut?

Yes, a haircut is a service after all.

Yet Stomper Oo was surprised when he was charged GST after getting a haircut at Salon One in Tampines recently.

That was because he was not charged GST before. Or so he thought.

To understand what happened, you have to first understand the salon's intricate pricing system.

The salon charges $6 for a haircut, but members pay only $3. To become a member, you have to pay a $60 deposit. Each time you get a haircut at the salon, $3 will be deducted from the deposit.

The Stomper said when he became a member three years ago, he was not charged GST. He just paid $60 and that was it.

He added that at the time, a haircut was only $2 for members, but it was increased to $3 at the start of 2024.

On May 10, he was informed that his balance was low, only $10 left.

"They asked for a $50 top-up," recounted the Stomper.

When he asked whether he could top up just $30, the salon staff said no.

"Then I had no choice. I topped up $50," said the Stomper.

"After I paid $50, she put out her palm and asked for another $4. I asked why. She said the $4 was for GST."

He was taken aback because he was not charged the additional GST before by the salon.

The current GST rate is 9 per cent, but 9 per cent of $50 is $4.50, not $4.

So apart from the 50-cent discrepancy, did the salon do anything wrong?

A check on the Inland Revenue Authority of Singapore (Iras) website confirmed that Salon One Beauty Salon is a GST-registered business, which means it is allowed to charge GST.

However, according to Iras, prices that are quoted must be GST-inclusive as the public needs to know the final price they have to pay upfront. Failure to comply with price display requirements can result in a fine of up to $5,000.

So when the salon told the Stomper he needed to top up $50 for the deposit, the GST should be included in the $50 and not added on after.

An exception is granted to hotels and food & beverage establishments that impose service charge on their goods and services. They are not required to display GST-inclusive prices to ease their operations.

Salon One has eight outlets around Singapore.

In May 2023, Salon One was issued a warning for false claims about price savings on its services and health benefits from treatments. Some outlets were also found to have engaged in pressure sales tactics.

The Consumers Association of Singapore had issued an alert against aggressive pressure-selling tactics at Salon One’s Ang Mo Kio outlet in July 2019.

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