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GST on Banquet Hall Services
This tax is levied on activities related to the conduct of banquets. Local tax offices administrate and collect Banquet tax. The revenue collected belongs to local governments. Also, this only applies in cases involving leasing services. However, a banquet hall offers leasing and catering services.
Therefore, one can safely assume that banquet services fall under HSN 996334, due to which the GST rate applicable to banquet services is 18%.
GST on banquet services
As far as we know, dinner services include a comprehensive meal rather than a regular family dinner due to the purpose of the event or the size of the crowd. These services vary at weddings, meetings, and conferences.
In India, banquet services are very popular and successful. Therefore, the government gets revenue by levying GST on banquet services.
The banquet hall is subject to 18% GST. It will be charged on its own. Also, so you have no doubts about mixed or mixed delivery or hotel or other services.
Difference between Banquet Services and Catering Services
Banquet and restaurant services are two separate services that should not be combined for the following reasons:
- First, in the case of banquet services, the customer receives not only food and beverages (as part of the restaurant service) but also ancillary services such as decoration, lighting, and music.
- Second, renting facilities and catering in the banquet service is given equal weight. There may be a situation where the hall is rented for an event, but the food is not available to hold a seminar, but there can never be a situation where food is available without renting the premises for any event.
What are Catering Services?
Simply put, catering services help customers prepare, produce, distribute and display food. If you’ve ever been to a wedding reception and the food there is deliciously prepared and served, that event is probably catering.
Therefore, catering services refer to a business whose primary purpose is to prepare food and food on-premises and then bring them elsewhere for consumption.
GST on Catering Services
As a customer, we do not pay attention to the food bill provided to us because we choose not to know or are ignorant about the components of the bill. In the pre-GST period, service charges, service taxes, and VAT were levied more than the cost of food. Let us first understand these elements well.
Service Tax
This is a tax on the services provided by the caterer. The government has already instructed catering service providers to differentiate between food and service areas, which is why they have started levying taxes accordingly.
Service charge
In fact, this is not a line. This is a fee charged by the caterers and not the government. For catering service providers this should not be confused with an income and service tax.
VAT
VAT is a tax levied on the food you consume.
However, after the introduction of GST, the rates are now very different. We will see the revised rates in the table below.
Types of restaurants that apply GST rates
- IRCTC restaurants 5% without ITC
- Separate restaurants 5% without ITC
- Restaurants with catering services 5% without ITC
- Restaurants within hotels – with room rates lower than room rates Rs. 7,500 5% without ITC
- Exterior catering services within hotels – with room rates less than Rs. 7,500 5% without ITC
- Restaurants within hotels – with room tariff more than Rs. 7,500 18% with ITC
- Outdoor Catering Services within Hotels – with room tariff more than Rs. 7,500 18% with ITC
The GST system collaborates the VAT and service tax portion of a customer’s food bill at the same rate; however, a customer may still check that service charges are levied.
If you have Rs. Assume that you have eaten valuable food Rs. 2,000 in a restaurant. Prior to the implementation of GST, the total bill was Rs. 2,651.
However, after the invention of the standard GST rate of 18%, the same bill is now Rs. 2,596, due to which you will get Rs. 55.
Even for restaurant and catering service providers, GST benefits because the tax-reduced load on their pockets allows them to increase their working capital.
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