Last updated: December 17th, 2019 5:10 PM

Service tax for catering business

A caterer refers to one person who is responsible for supplying directly or indirectly any food or food related operation. The operation would generally comprise of hard drinks, soft drinks, crockery and other items required. An outdoor caterer too works on the same line but in this case the food and other accompaniments are either served in the same location but in an outdoor setting or at a different location altogether. The catering service rendered outdoor is a taxable service under service tax.

Service tax registration for catering business

Those engaged in catering business must obtain service tax registration if their annual taxable services turnover crosses Rs.9 lakhs in any year. Once service tax registration is obtained, the business must file service tax returns twice a year in April and October 25th of each year. Further, service tax payments would be due either quarterly or monthly based on the business entity.

Service tax rate for catering business

The service tax levied for outdoor catering service is 14%. The accounting code for the service is 00440051. If the food served comprises of food, alcoholic drinks, non-alcoholic drinks or any type of consumable product in an outdoor catering, it will attract 60% service tax on the total amount of the bill. The total amount of the bill in this context means sum total of the gross amount plus the fair value of the goods and services supplied under the same or different contract after the deduction of the amount that was charged for such a service or the goods and the VAT or sales tax levied on the service or goods.

CENVAT Credit

Outdoor caterers cannot avail CENVAT credit of duties paid on specific goods. However the same can be obtained if the duty is paid on inputs and the service tax is paid on input services.

Taxation on Bundled Services

Banquet halls let out on rent by hotels restaurants etc. along with consumable products such as food drinks etc. fall under the category of Mandap keeper or convention center. An entry has been made under notification NO.26/201-ST towards abatement for bundled services for offering consumables along with the premise on rent.

The bundle service providers are also liable to pay service tax according to the notification. Under the notification entry NO.26/2012 abatement is provided for the below mentioned services up to 30% of the gross amount charged from the customer qualifies for abatement. Service tax however is payable on 70% of the gross amount. The bundle service provider cannot avail CENVAT credit on the specified inputs however the same can be availed if the duty is paid on capital goods and service tax is paid on input services