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Understanding GST applies on Catering Services in India

Catering services play a crucial role in India’s hospitality and event management industries. Whether for weddings, corporate functions, or social events, catering businesses must comply with Goods and Services Tax (GST) regulations. Understanding how GST on catering services, including tax rates, exemptions, and input tax credit (ITC), is essential for smooth business operations and legal compliance.

This article provides a detailed guide on GST for catering services, including applicable tax rates, GST registration, invoicing, ITC claims, and compliance requirements.

What Are Catering Services Under GST?

As per GST law, catering services refer to the supply of prepared food and beverages along with ancillary services like serving, table arrangements, and event-based meal services. Catering services differ from standalone food delivery or restaurant services because they involve onsite food preparation and service at the customer’s location.

Types of Catering Services Covered Under GST

✔ Wedding and event catering services
✔ Corporate catering (office meals, business events)
✔ Outdoor catering (festivals, exhibitions)
✔ Institutional catering (schools, hospitals, canteens)
✔ Hotel catering services
✔ Industrial catering (factory meal supply)

GST Rate on Catering Services in India

The GST rate on catering services varies based on the nature of the service provider and whether input tax credit (ITC) is claimed.

Type of Catering Service	GST Rate	Input Tax Credit (ITC) Availability
Standalone Catering Service	5% GST	No ITC
Catering Service Provided by Hotels (Room Tariff < ₹7,500)	5% GST	No ITC
Catering Service Provided by Hotels (Room Tariff ≥ ₹7,500)	18% GST	ITC Available
Outdoor Catering (Standalone)	5% GST	No ITC
Outdoor Catering by Hotels (Linked with Accommodation)	18% GST	ITC Available
Catering for Industrial & Institutional Use	5% GST	No ITC

✔ If the caterer does not claim ITC, GST is charged at 5%.

✔ If ITC is availed (for input purchases like raw materials, fuel, etc.), the GST rate is 18%.

GST Registration for Catering Businesses

Who Needs to Register for GST?

A catering business must register under GST if:

The annual turnover exceeds ₹20 lakh (₹10 lakh for special category states).
They provide catering services to corporate clients or GST-registered businesses.
They engage in interstate catering services, requiring mandatory GST registration.

Documents Required for GST Registration

✔ Business PAN Card
✔ Aadhaar Card of Proprietor/Partners
✔ Business Address Proof
✔ Bank Account Details
✔ FSSAI License (Food Safety Registration)
✔ Rental Agreement (if applicable)

GST Compliance and Invoicing for Caterers

1. GST-Compliant Invoices for Catering Services

A GST invoice must contain:

✔ Business name, GSTIN, and address
✔ Invoice number and date
✔ Customer’s name and GSTIN (if registered)
✔ Description of services provided (catering, outdoor catering, etc.)
✔ GST rate (5% or 18%) and total amount payable
✔ Tax component (CGST, SGST, IGST)
✔ Reverse Charge Mechanism (RCM) mention if applicable

2. Filing GST Returns for Catering Services

Registered catering businesses must file:

GSTR-1: Monthly/quarterly return for outward supplies
GSTR-3B: Monthly summary return of GST liabilities
GSTR-9: Annual GST return (if turnover exceeds ₹2 crore)

Input Tax Credit (ITC) for Catering Businesses

ITC helps businesses reduce tax liability by allowing them to claim credit on GST paid on purchases.

Eligible ITC Claims for Catering Businesses

✔ GST paid on raw materials (vegetables, grains, dairy, meat, spices)
✔ Kitchen equipment and fuel (LPG, stoves, ovens)
✔ Rental expenses for commercial kitchens
✔ ITC on event furniture, utensils, serving equipment
✔ Marketing, advertising, and promotional services
✔ ITC on logistics and transportation expenses

Blocked ITC (Not Allowed)

Under Section 17(5) of the CGST Act, ITC cannot be claimed on:

❌ Food and beverages for personal consumption
❌ Capital goods used for personal use
❌ ITC for caterers charging 5% GST (only 18% GST allows ITC claims)

GST on Catering Services for Special Categories

1. GST on Wedding & Event Catering

Food served at weddings or private functions is taxed at 5% if the caterer does not claim ITC.
If ITC is availed, GST is 18%.
If catering is bundled with banquet hall services, it is taxed as a composite supply under banquet services at 18%.

2. GST on Corporate Catering & Industrial Canteens

Food supplied to offices, corporate clients, and canteens attracts 5% GST (without ITC).
Large catering firms linked with hotels can charge 18% GST (with ITC).

3. GST on Outdoor Catering & Food Stalls

Outdoor catering services for public events and exhibitions are taxed at 5%.
If outdoor catering is provided by hotels with room tariffs over ₹7,500, the GST rate is 18%.

GST Penalties for Non-Compliance in Catering Services

Non-Compliance	Penalty
Late GST return filing	₹50 per day (₹20 for nil returns)
Failure to register for GST	10% of tax due or ₹10,000 (whichever is higher)
Wrong GST rate applied	100% penalty on tax shortfall
Failure to issue GST invoice	₹25,000 per incorrect invoice

Proper GST compliance ensures a smooth business operation and avoids penalties.

Conclusion

Understanding GST on catering services is essential for compliance and business profitability. Catering businesses must charge either 5% or 18% GST based on ITC claims, maintain proper invoices, and file GST returns on time. Proper tax planning helps optimize GST liability and ensures legal compliance.