Catering Services to Canteen, Mess, Offce etc attract 5% GST [Read Notification]

The Central Board of Indirect Taxes and Customs (CBIC) has notified that five per cent tax is applicable to catering services rendered restaurant, mess, canteen, eating joints and such supplies to institutions to contractual basis.

The 28^th GST Council meeting had decided to rationalize entry relating to the composite supply of food and drinks in the restaurant, mess, canteen, eating joints and such supplies to institutions (educational, office, factory, hospital) on contractual basis at GST rate of 5%. The Council made it clear that the scope of outdoor catering under 7(v) is restricted to supplies in case of outdoor/indoor functions that are event-based and occasional in nature.

The notification issued by the Board said that five percent of tax applicable to supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent.

It was further said that “this item includes such supply at a canteen, mess, cafeteria or dining space of an institution such as a school, college, hospital, industrial unit, office, by such institution or by any other person based on a contractual arrangement with such institution for such supply, provided that such supply is not event-based or occasional.”

Presently, 18 percent tax rate applicable to outdoor catering services. For canteen and restaurant services, it is five per cent without input tax credit. There were certain ambiguities over the rate of tax applicable to food supplied to canteens through third-party catering. Due to this, the suppliers were charging different rates on the said services.