Special Tax Rates For Outdoor Catering Services Explained

MCQ SELF CHALLENGE # 0072 On Special Provisions Relating To Rate Of Tax In Case Of Outdoor Catering Services

Dear Professional Seniors & Friends,

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Here is the Next post of #MCQ on concept-based practical professional knowledge on special provisions relating to the rate of tax in case of outdoor catering services in a unique manner to be self-answered by participants. The detailed answers to these MCQs shall be posted the next day for the self-assessment of the participants.

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MCQ 72.1: On 1st July 2018 ABC caterers made a bill of Rs 100000 for providing daily food to employees of X Pvt ltd on a contract basis. Which among the following is correct in relation to the rate of tax?

A) 5%

B) 12%

C) 18%

D) 28%

MCQ 72.2: What if in the above question, ABC provides catering services to X Pvt Ltd on 28th of July 2015

A) 15%

B) 12%

C) 18%

D) 28%

Answer MCQ Self Challenge # 0072

Dear Professional Seniors & Friends.

Warm Greetings!

This post of MCQ is on amendment on provisions in the GST act which is giving effect to the changes in the rate of tax in the case of outdoor catering services.

Answer to MCQ 72.1: C) 18%

Answer to MCQ 72.2: AJ.5%

Practical Analysis for MCQ 72.1 And 72.2 -

• As per notification no 11/2017 central tax rate dated 28th June 2017 as amended by various notifications thereafter, the rate of tax for providing food or any other article for human consumption or any drink will be as follows-

Particulars

Supply of food or any other article for human consumption or any drink provided by a restaurant, eating joint including mess, canteen

Rate

5% with no ITC available

Particulars

Supply of food or any other article for human consumption or any drink in outdoor catering

Rate

18%

• But the government vide Notification No. 13/2018 dated 26th July 2018 has brought an amendment in Notification No. 11/2017 to restrict the scope of outdoor catering cases of outdoor indoor functions that are event-based and occasional in nature.
  
• The revised rates are as follows-

Particulars

Supply of food or any other article for human consumption or any drink provided by a restaurant, eating joint including mess, canteen other than supplies covered below

Rate

5% with no ITC available

Particulars

Supply of food or any other article for human consumption or any drink at Exhibition Halls, Events, and Conferences., Marriage Halls and other outdoor or indoor functions that are event-based and occasional in nature

Rate

18%

• As per the amendment, now providing food, and beverages in a marriage function would be treated as Outdoor catering and taxed at 18% but providing daily food to a company for its employees on a contract basis is not outdoor catering and hence taxed at 5% without the benefit of ITC
• These amendments are effective from 27th of July 2016
• The above amendments provide a major relief to the outdoor catering industry
• Based on the above analysis, correct answer MCQ 72.1 : C) 18%
• Correct answer MCQ 72.2 : A) 5%

(Disclaimer: The objective of the MCQ post is just to discuss the concept, it may happen, by change of facts, the answer may be different. Please do not treat this as professional opinion; you can definitely have your own opinion)

Sincere Regards!

CA Sanjay Kumar Agrawal

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