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GST on Catering Services

GST on Catering Services

Introduction

Goods and Services Tax (GST) has significantly impacted various industries in India, including the catering business. Whether for weddings, corporate events, or small gatherings, catering services play a vital role in providing food and beverages to customers. However, the taxation of catering services under GST is often misunderstood.

In this article, we will explore the GST on catering services, including applicable tax rates, Input Tax Credit (ITC) provisions, compliance requirements, and exemptions. By the end, businesses and customers will have a clear understanding of how GST applies to catering services in India.


Understanding Catering Services Under GST

Catering services involve preparing, supplying, and serving food and beverages for functions, corporate events, weddings, and social gatherings. Under GST law, catering services fall under the category of restaurant and outdoor catering services, attracting specific tax rates and conditions.

The government classifies catering services separately from regular restaurant services, considering factors like the nature of food supply, serving at a designated venue, and additional services like decoration and staffing.


GST Rate on Catering Services

The GST rate on catering services depends on various factors, including the type of service provider and the location of service.

1. GST Rate for Normal Catering Services

2. GST Rate for Outdoor Catering (Without ITC Option)

3. GST Rate for Catering in Hotels or Clubs

Type of Catering Service GST Rate
Normal catering services 18%
Outdoor catering (Composition Scheme) 5% (No ITC)
Catering inside hotels (Tariff < ₹7,500) 18%
Catering inside hotels (Tariff ≥ ₹7,500) 28%

Input Tax Credit (ITC) for Catering Businesses

Input Tax Credit (ITC) is a significant benefit under GST that allows businesses to claim tax paid on purchases against their GST liability. However, ITC on catering services is subject to restrictions.

1. ITC for Catering Businesses

2. ITC Restrictions for Businesses Availing Catering Services


GST Compliance for Catering Businesses

Catering service providers must follow GST compliance regulations, including:

1. GST Registration Requirements

2. GST Invoicing for Catering Services

A tax invoice issued for catering services must include:

3. GST Returns Filing


GST Exemptions for Catering Services

While catering services are generally taxable, there are specific cases where exemptions apply:

1. Catering Services in Educational Institutions

2. Non-Profit Organizations and Government Institutions


Impact of GST on Catering Businesses

GST has both positive and negative implications for catering service providers:

Benefits:

Standardized Taxation – Uniform 18% GST rate simplifies tax calculations.

Elimination of Multiple Taxes – No VAT or service tax confusion.

Claiming ITC – Registered catering businesses can offset input costs.

Challenges:

Higher Tax Burden – Earlier, service tax on catering was 15%; now it is 18%.

ITC Restrictions for Clients – Businesses availing catering services cannot claim ITC.

Complex Compliance – Monthly GST returns increase administrative work.


Conclusion

GST on catering services is levied at 18% for most businesses, with some exemptions and a 5% Composition Scheme for small caterers. While Input Tax Credit is available for catering businesses, clients availing catering services cannot claim ITC under Section 17(5).

Catering businesses must ensure proper GST registration, invoicing, and return filing to remain compliant. Understanding GST rates, ITC provisions, and exemptions can help catering service providers optimize costs and offer competitive pricing.

For catering businesses, staying updated with GST rules ensures smooth operations, compliance, and financial efficiency.

 

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For more info on GST, visit: https://gst.gov.in/

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