Goods & Services tax (GST) changed India’s tax system and impacted several economic sectors. The banquet and catering services business was also changed by GST. Here, we will see how GST impacts banquet & catering services, and also how it will impact customers & clients of these services.
GST on Banquet Halls and Marriage Halls
GST is an indirect tax carried out in India to replace a few other indirect taxes levied earlier. The Goods and Services Tax Act, or GST, was backed by the Indian Parliament on March 29, 2017 and became effective on July 1.
GST has brought down the tax rate on assembling organisations enabling them to price their goods cheaper for everybody.
GST on Banquet Structure & Rates
With GST, the old tax structure gets a new, multi tiered tax structure. The GST rates applicable to banquet and catering services falls under the 18% tax bracket with a few limitations and exclusions. This particular industry’s financial fundamentals have been transformed at this rate, requiring enterprises to examine their pricing methods and operational frameworks.
ITC – Input Tax Credit for Banquets
Input Tax Credits (ITC) availability is a major factor which directly affects profitability of businesses providing banquet and catering services. Companies may claim ITC under GST on Banquet for inputs like food products, raw materials and services used in the course of business. They must understand the details of ITC to reduce taxes and control expenditures.
Compliance & Documentation
For companies offering banquet and catering services, GST compliance is essential. It’s currently important to keep accurate records, submit correct returns and abide by almost all legal requirements to stay away from legal implications and fines. Businesses are searching for dependable accounting systems and software to meet GST regulations.
Impact on Pricing & Consumer Behavior
The move to GST on banquet has seen banquet and catering service providers altering their pricing methodology. The 18% GST rate needed reevaluating pricing strategies, because this could impact customer demand and behaviour. In a tough market, businesses must balance maintaining competitive pricing as per the GST rate.
Challenges & Opportunities
GST on banquets has created some difficulties in the banquet and catering sector but also opened up possibilities for growth and development. Businesses should accept the brand new tax system, use technology to simplify their operations and enhance consumer experiences in case they plan to use the possibilities presented by the GST regulations.
GST Rates on Banquet Hall & Catering Services
Usually banquet hall services (renting the venue and decorating) are supplied by hotels, big banquet halls & India. Also, they offer restaurant services like catering, staffing and planning events. But a hotel or banquet venue can pick either : rent the space out or even offer culinary services.
For the services mentioned previously, four HSN classes are pertinent.
- HSN 996331 – Cafes, room services, food delivery to homes along with other similar services are available on HSN 996331.
- HSN 996334 – Catering for parties, weddings, exhibition halls along with other events is included in HSN 996334.
- HSN 998553 – Reservations for convention and congress centres can be made through HSN 998553.
- HSN 997212 – Services associated with leased or owned non-residential property include HSN 997212, which include leasing or renting services.
Banquet Hall GST rate
Debate has always been whether banquet services ought to be categorised as HSN 996334 or 997212. HSN 997212 covers the leasing or leasing of commercial, non-residential and industrial structures. It also only applies to scenarios involving leasing services. A banquet hall, in turn, offers lease and catering services.
It is thus better to assume that banquet services are covered by HSN 996334 and the banquet hall or marriage hall gst rate is 18%.
All of us know that for gst rate on a banquet hall with food or without food, these services need a far more elaborate meal than a family supper because of the audience size or even breadth. Such services might include weddings, meetings, conferences, etc.
Banquet Services is a prominent industry in India. Thus the government makes money by charging GST on marriage hall or banquet hall services. GST at 18% is charged on the banquet hall. Also there is no problem with mixed or composite supplies or other services in hotels, etcetera.
How does GST differ on Banquet Services compared to Restaurant Services?
For the following reasons banquet and restaurant services shouldn’t be confused:
- To begin with, in banquet services the client gets the venue (which are in the restaurant service) in addition to other services like music, lighting, and decor.
- Second, the GST on banquet hall service weights equally on the renting of facilities and on meals supplied. Occasionally a hall is leased for an event but absolutely no food is supplied – for example for a seminar. However there are never circumstances where food is supplied without renting space for an event.
What are Catering Services?
Essentially, catering services are cooking administrations that help clients with the assembling, conveyance and show of meals. It is catering if you ever went to a wedding gathering in which the food was ready and served.
Hence an organisation dealing with catering administrations is one which aims at bringing food and feasts in the area and afterward conveying them to another area for use.
GST on Catering Services
We consumers seldom take note of the food bill served to us simply because we’re either ignorant of its contents or we wish to stay so. Earlier, service taxes, VAT and service charges were levied on Banquet. First let’s understand these elements.
Service Tax
It’s a levy on the products of the catering business. The government has already told caterers to separate the meals and service portions and they’re collecting taxes accordingly.
Service charge
This really is no tax whatsoever. The caterers, not the government, enforce the fee. It’s not to be confused with service tax since it’s an income to the caterers.
VAT
The VAT is another tax on foodstuffs that was there before GST.
However the rates have changed significantly with the GST. Analyze the updated rates in the table below.
| Restaurant Type | GST Rate | Additional Information |
| ITC Standalone restaurants | 5% | – |
| Restaurants Without ITC | 5% | – |
| Restaurants Without ITC that cater With ITC | 5% | – |
| Restaurants with ITC that cater Without ITC | 5% | – |
| Hotels’ restaurants with rooms less than Rs. 7,500 | 5% | – |
| Outdoor Catering Services & rooms under Rs. 7,500 | 5% | Without ITC |
| Restaurants inside hotels – room tariff over Rs. 7,500 | 18% | With ITC |
| Outdoor Catering Services within Hotels – with room tariff over Rs. 7,500 | 18% | With ITC |
Assume you spent Rs. 2,000 on dinner out in a diner. Overall cost before GST was Rs. 2,651 (10% service fee / 5.6% service tax / 14.5% VAT / miscellaneous taxes 0.04%). However the exact same bill is now worth Rs. 2,596 at a 18% GST rate ( which helped you save Rs. 55.
Even for all those that supply catering and restaurants with services, the GST on banquets is a better option as it takes the stress out and also provides more working capital.
Conclusion
The banquet and catering services sector went through a significant transformation since GST on banquets became effective. It has added regulatory and price complexity but it’s also allowed businesses to simplify their procedures and improve their competitive edge. By understanding GST’s details, businesses can position themselves for sustainable growth and good results in the competitive hospitality climate.
FAQs
Can catering charge GST?
In case the catering service is supplied by a registered taxpayer, the GST fee is 18% on the amount charged (goods & services included). In case the caterer offers just the service and not the products, though, the GST fee can be 18% on the service costs.
Is ITC available on catering services?
ITC isn’t for the supply of the following services or goods or both : Food and drinks, Outdoor catering, Beauty treatment, etc.
What is the GST rate applicable to banquets?
It involves a pure supply of food. ‘Banquet service’ is an equivalent supply of Service classifiable under heading 9963. On the same GST 18% (9% CGST + 9% SGST) is leviable.
What makes a restaurant different from a banquet?
The function of serving in a banquet is similar to the restaurant as it’s readily available for mass gatherings for charity, weddings and birthday parties.
What GST turnover limit applies to catering services?
When turnover is over 40 lakhs in goods and 20 lakhs in services, restaurants require a registration under GST registration for restaurants. Ten Lakhs in special category states like North Eastern – all hilly states applies.
