Money & GST · Guide
Salon Accounting in India: Daily, Monthly and Year-End Bookkeeping
A salon bookkeeping routine for Indian owners: daily closing, a chart of accounts, UPI and card reconciliation, packages as liabilities and what your CA needs.
Short answer
Salon accounting in India means recording every rupee in and out under the right head, matching cash, UPI and card receipts to the bank monthly, and closing the books at 31 March. Treat unused packages and wallet balances as money you owe, keep staff advances and stock on the books, and give your CA reconciled records.
- Close the day, reconcile the bank and read a P&L every month, so year end is a handover to your CA rather than a rescue.
- Unused package, membership and wallet balances are money you owe clients until the service is delivered, not income.
- Record card and UPI sales at the full amount and the bank's fee as an expense, or your sales, bills and bank will never agree.
- From 1 April 2026 the Income-tax Act, 2025 applies, and a proprietor's salon must keep books once business income crossed ₹2.5 lakh or turnover ₹25 lakh in any of the three previous years.
- Presumptive taxation lets an eligible salon declare 6% of bank receipts and 8% of the rest, but declaring less brings books and an audit, and leaving the scheme can lock you out for five years.
In this guide+
- What does salon accounting involve?
- A simple chart of accounts for a salon
- How do you reconcile cash, UPI and card receipts with the bank?
- Packages, memberships and wallets are money you owe
- Staff advances, deposits and stock
- How do you read a monthly P&L?
- Income tax: what the Income-tax Act, 2025 means for your books
- What does your CA need at year end?
- Frequently asked questions
Most salon owners know their sales to the rupee and their profit to the nearest guess. The gap is bookkeeping: package money counted as income, card fees that vanish between the bill and the bank, staff advances nobody wrote down, and a shoebox of bills handed to the CA in June.
This guide sets out a routine that closes that gap: what to do daily, monthly and at year end, a chart of accounts built for a salon, how to reconcile cash, UPI and cards, and what the new Income-tax Act, 2025 means for your books. GST has its own guide, GST for salons, so it appears here only where it touches the books. The amounts are examples; for your own tax position, ask your CA.
What does salon accounting involve?
Salon accounting is recording every rupee in and out under the right head, checking it against the bank, and summarising it into a monthly P&L and a year-end set of books. Done on a rhythm, it takes about an hour a week plus half a day a month.
| When | What you do | Output |
|---|---|---|
| Daily | Close the counter: sales by payment mode, refunds, cash expenses with vouchers, cash to deposit | A one-page daily closing |
| Weekly | Enter purchase and expense bills, pay vendors from the bank, check stock of fast sellers | Bills filed and posted |
| Monthly | Reconcile the bank, run payroll, update package and wallet balances, read the P&L | A P&L and a reconciled bank |
| Yearly | Count stock at 31 March, list what you owe and what you're owed, hand over to your CA | Books for the tax year |
The daily close is the foundation. Our guide to daily closing for salons covers counting the drawer and spotting leaks; for the books, what matters is that every day ends with a sales total split by payment mode, a list of cash paid out with a voucher for each, and the cash deposited.
A simple chart of accounts for a salon
A chart of accounts is the list of heads every transaction is posted to. A salon needs about 40, in six groups. Keep them the same every month, or your months won't compare.
| Group | Accounts | Notes |
|---|---|---|
| Income | Hair, skin, nails, makeup and bridal services; retail sales; package and membership redemptions | Before GST; one line per service category shows what earns |
| Direct costs | Backbar products used; cost of retail goods sold; commission and incentives; card and payment fees | Costs that rise with every client |
| Staff | Salaries; employer PF and ESI; staff welfare; training | Commission stays in direct costs |
| Overheads | Rent; electricity and water; repairs; laundry and housekeeping; marketing; software, phone and internet; professional fees; bank charges; loan interest; depreciation | Costs that stay put in a slow month |
| Assets | Cash in hand; bank; UPI and card receipts in transit; retail stock; backbar stock; staff advances; rent and electricity deposits; equipment and interiors | What you own or are owed |
| Liabilities and capital | Client advances and packages; wallet balances; gift vouchers; GST payable; salaries, commission and tips payable; vendors; loans; capital; drawings | What you owe, and what is yours |
Two heads catch owners out. GST you collect goes to GST payable, never to income. Tips paid by UPI or card go to tips payable and out to staff, because they were never your money.
How do you reconcile cash, UPI and card receipts with the bank?
Once a month, take your billing totals by payment mode and match each one to what actually reached the bank, explaining every difference. Cash should match deposits after cash expenses, UPI should match settlements, and cards should match settlements plus the bank's fees.
Record every card and UPI sale at the full bill amount, and the bank or gateway fee as an expense. Booking what lands in the bank as your sales understates turnover, hides what payments cost you, and leaves your books disagreeing with your bills and GST returns.
Anything left unexplained is a question for the person who closed that day: a UPI payment taken on someone's personal QR, a bill cancelled after payment, or cash out without a voucher. If you bill in Salos, each bill records how it was paid across 9+ modes, split freely, which gives you the per-mode totals this starts from.
Packages, memberships and wallets are money you owe
When a client pays in advance, you haven't earned the money; you owe her services. Post package, membership and wallet receipts to a liability, and move each part to income as the service is delivered, at the package's per-session value.
Wallet top-ups work the same way. If she pays ₹10,000 for ₹11,000 of credit, the liability is the ₹10,000 she paid, and each ₹1,100 of credit she spends releases ₹1,000 to income. When a package expires unused under your written terms, ask your CA when to release the balance to income. Pricing these schemes is covered in salon memberships and packages.
Read the liability total alongside your bank balance. If clients have ₹3 lakh of unused packages and wallet credit at the end of November, ₹3 lakh of that balance is already promised to them.
Staff advances, deposits and stock
Staff advances, deposits and stock are assets: money or goods that are still yours, not expenses. Treating them as expenses makes the month they happen look worse and the months after look better than they are.
- Staff advances: post to a staff advances account, one line per person, and reduce it from salary as agreed in writing. The rules on how much you can recover, and when, are in our salon payroll guide.
- Deposits: a rent or electricity deposit is an asset you get back, not a cost.
- Equipment and interiors: record them as fixed assets. Your CA calculates depreciation for tax; you should still set aside a monthly replacement figure.
- Stock: post purchases to stock, and work out the month's cost from the count: opening stock + purchases − closing stock. Keep retail and backbar separate, because one is a cost of sales and the other a cost of services.
At 31 March, count every product and value it at cost, writing down anything expired or damaged. Our salon inventory guide covers consumption norms and monthly audits that make the year-end count quick.
How do you read a monthly P&L?
Once the bank is reconciled, post the month's package redemptions, add bills that belong to the month but haven't arrived (October's electricity bill comes in November), add depreciation, and read the P&L against last month and the same month last year.
Income tax: what the Income-tax Act, 2025 means for your books
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026, and your financial year is now called the tax year: tax year 2026-27 runs from 1 April 2026 to 31 March 2027. Income up to 31 March 2026 is still taxed under the old Act, so the return filed in 2026 was for 2025-26 under the old law, and tax year 2026-27 is the first under the new one.
| Rule | What it says | Where |
|---|---|---|
| Keeping books | An individual or HUF running a business must keep books if business income exceeded ₹2.5 lakh or turnover ₹25 lakh in any of the three preceding tax years, or a new business is likely to; for firms and companies, ₹1.2 lakh and ₹10 lakh | Section 62 |
| Presumptive taxation | Resident individuals, HUFs and partnership firms (not LLPs) that meet its conditions, with turnover up to ₹2 crore, or ₹3 crore if cash receipts are within 5%, can declare 6% of receipts through specified banking or online modes plus 8% of the rest, or a higher profit they declare | Section 58 |
| Declaring less than that | Requires books and a tax audit, if total income is above the amount not chargeable to tax | Sections 58(3), 62 and 63 |
| Leaving the scheme | Declare under it, then outside it in any of the next five tax years, and you can't use it for the following five; books and an audit apply if income is above the amount not chargeable to tax | Sections 58(7) and 58(8) |
| Tax audit | Turnover above ₹1 crore, or ₹10 crore if cash receipts and cash payments are each within 5%; not required if you declare profit under section 58 | Section 63 |
| Return due dates | For tax year 2026-27: 31 August 2027 for business income without an audit, 31 October 2027 with one, and the audit report a month before | Section 263, as amended by the Finance Act, 2026 |
| Cash receipts | Don't accept ₹2 lakh or more in cash from one person in a day, for one transaction or for one event | Section 186 |
| Cash expenses | Payments of more than ₹10,000 to one person in a day, other than through specified banking or online modes, aren't deductible | Section 36(4) |
Your CA will confirm which of your UPI, card and bank receipts count for the 6% rate, and whether you need to keep books when you declare presumptive income. Keep them either way: you can't read a P&L, answer a bank's loan questions or defend a lower profit without them.
The bridal season is when the cash rule bites: a ₹2.5 lakh bridal package can't be taken in cash from one client, even across several payments for the same wedding. Take it by UPI or bank transfer.
What does your CA need at year end?
Your CA needs the year's reconciled bank, sales and expense records, plus a few lists only you can make: stock, what clients have prepaid, what staff owe you, and what you took out. Send them in April, not in July.
Keep the records long enough. GST law requires a registered person to keep accounts for 72 months from the due date of the annual return for that year; the income-tax rules set their own period, so ask your CA and keep whichever is longer.
Frequently asked questions
What books of account should a salon keep in India?
At minimum: a cash book, a bank book, a sales register by bill and payment mode, a purchase and expense register with bills and cash vouchers, a salary and advances register, a stock register for retail and backbar, and a list of package, membership and wallet balances. Section 62 of the Income-tax Act, 2025 lets the CBDT prescribe which books must be kept, so ask your CA what applies to yours.
Does a salon have to maintain books under the Income-tax Act, 2025?
An individual or HUF running a salon must keep books if business income exceeded ₹2.5 lakh or turnover exceeded ₹25 lakh in any of the three preceding tax years, or a new salon is likely to cross either. For firms and companies the limits are ₹1.2 lakh and ₹10 lakh. Declaring less than the presumptive profit under section 58 also brings a duty to keep books.
Can a salon use presumptive taxation?
A resident individual, HUF or partnership firm (not an LLP) running a salon can, if turnover is up to ₹2 crore, or ₹3 crore when cash receipts are within 5%. Profit is taken as 6% of receipts through specified banking or online modes and 8% of the rest, or a higher figure you declare. Section 58 of the Income-tax Act, 2025 sets the rules.
When does a salon need a tax audit?
Under section 63 of the Income-tax Act, 2025, when turnover exceeds ₹1 crore in a tax year, or ₹10 crore if cash receipts and cash payments are each within 5% of the total. A salon declaring profit under the presumptive scheme in section 58 doesn't need one on turnover alone, but declaring less than the presumptive profit brings an audit if total income is above the non-taxable limit.
How should a salon account for packages and memberships?
Post the money received to a liability, not to income, because you still owe the services. Move each session to income when it is used, at the package's per-session price, and keep a running list of unused balances. Wallet top-ups work the same way: the liability is what the client paid, released in proportion as she spends her credit.
What is the tax year under the new Income-tax Act?
The tax year is the twelve months from 1 April to 31 March, the same as the financial year, and it replaces the old Act's "previous year" and "assessment year". Tax year 2026-27, from 1 April 2026 to 31 March 2027, is the first under the Income-tax Act, 2025, and businesses don't need to change their accounting year.
What does a CA need from a salon at year end?
Bank statements for every business account, sales by payment mode, UPI and card settlement reports, purchase and expense bills, GST returns, payroll records, the 31 March stock count, a list of unused packages and wallet balances, staff advances, equipment invoices, loan statements, the rent agreement, your drawings, and your tax statements from the e-filing portal. Send them in April.
Sources
- Income Tax Department e-filing portal — Objective and scope of the new Act (FAQs on the Income-tax Act, 2025)
- Income Tax Department — Income-tax Act, 2025, section 58 (presumptive taxation)
- Income Tax Department — Income-tax Act, 2025, section 62 (maintenance of books of account)
- Income Tax Department — Income-tax Act, 2025, section 63 (tax audit)
- Income Tax Department — Income-tax Act, 2025, section 36 (cash payments not deductible)
- Income Tax Department — Income-tax Act, 2025, section 186 (cash receipts of ₹2 lakh or more)
- Gazette of India — The Finance Act, 2026 (No. 4 of 2026, 30 March 2026), amending return due dates in section 263
- CBIC — CGST Act, 2017, section 36 (period of retention of accounts)
General information for salon owners, not legal or tax advice. Rules change and some vary by state — check with your CA or the department concerned before you act on them.
The Salos team
We build Salos, the salon operating system, and run it every day inside a working salon — so these guides come from the same front desk, chairs and month-end you deal with.