Introduction

Banquet halls, catering, decoration, and photography services play a crucial role in weddings, events, and parties. With the introduction of Goods and Services Tax (GST), the rates and tax implications on these services have evolved—particularly after the major amendment effective from 01 October 2019. In this blog, we will cover:

• GST applicability before and after the amendment
• Current GST rates on banquet, catering, decoration, and photography services
• Booking process and invoicing guidelines
• Are grouped services considered a composite supply or a mixed supply
• Applicable GST rate when all four services are availed as a package

 

GST on Banquet and Catering Services: Before 01/10/2019

1. Banquet Hall Rental (Pre-2019)

• Tax Rate: 18% GST
• HSN Code: 9963 – Accommodation, Event & Function Services
• Nature: Treated as a standalone service

2. Catering Services (Pre-2019)

• Tax Rate: GST applicable at 18% with eligibility to claim Input Tax Credit (ITC)
• HSN Code: 9963
• This included food preparation and serving.

3. Decoration & Photography (Pre-2019)

Tax Rate:

• Decoration: 18%
• Photography: 18%

HSN Codes:

• Decoration: 9985 (Event management services)
• Photography: 9983

Important Note: Before the amendment, all these services were taxed separately unless bundled under one price. Even when bundled, classification as composite or mixed supply depended on the dominant service.

What Changed After the 01/10/2019 Amendment?

The GST Council brought clarity on composite supplies related to event services such as banquet with catering.

Key Change:

Effective 1st October 2019, when banquet hall and catering services are provided as a composite supply, a GST rate of 5% applies without the benefit of Input Tax Credit.

This amendment made the tax structure more straightforward for event organizers and customers. It encouraged bundled services with a lower tax rate - BUT ITC IS NOT ALLOWED.

GST Rates After 01/10/2019

Composite Supply: Charged at the GST rate applicable to the dominant service.

Mixed Supply: Charged at the highest applicable GST rate among the included items

 

Composite vs Mixed Supply: Explained with All 4 Services

Let’s consider a client booking the following for a wedding:

1. Banquet Hall
2. Catering
3. Decoration
4. Photography

Case 1: All services under one contract & price

• The principal supply is usually banquet + catering, making it a composite supply.
• If decoration and photography are incidental (add-on), the entire bundle may qualify under composite supply at 5% (no ITC).

Case 2: All services under separate contracts or invoiced separately

• Treated as mixed supply
• Highest GST rate applies: i.e., 18%

Best Practice:

• Opt for a single contract with banquet + catering as main service
• Ensure decoration and photography are clearly described as ancillary
• Charge a single consolidated price to avail 5% rate

 

How to Book Services and Understand GST Liability

Select the Service Package

• Choose either individual services or a bundled package.

Check the Invoice Terms

• A single invoice with one price helps in qualifying for composite supply.

Vendor Registration

• Ensure vendors are GST registered to issue valid tax invoices.

GST Liability

• If 5% rate is charged (composite supply), vendors cannot claim ITC
• For decoration or photography billed separately, 18% GST with ITC applies

Which Service Attracts What Rate?

Conclusion

Understanding the GST implications on banquet hall, catering, decoration, and photography services is crucial for event planners and clients alike. The amendment from 01/10/2019 allows a reduced rate of 5% GST on composite supply of banquet + catering, which can also apply to decoration and photography if structured properly.

For maximum tax benefit:

• Bundle services under one contract
• Ensure banquet + catering are principal
• Treat others as ancillary

By doing so, you enjoy a lower GST rate while ensuring compliance.

Real-Life Case: Tollygunge Club Ltd. – GST on Bundled Services

Authority for Advance Ruling (AAR), West Bengal

• Case: Tollygunge Club Ltd., In re
• Order No.: WBAAR 08 of 2024
• Date: September 10, 2024

Background

Tollygunge Club Ltd., a premier club in Kolkata, offers services such as renting premises for events (weddings, parties, social gatherings) and providing indoor catering. The club sought clarity on the GST rate applicable when these services are offered together.

Key Issues

1. Composite Supply Determination: Whether the combined offering of renting premises and catering services qualifies as a "composite supply" under GST.
2. Applicable GST Rate: If deemed a composite supply, what GST rate applies, especially considering the room tariff conditions.

AAR's Observations

• Naturally Bundled Services: The AAR observed that renting premises and providing catering services for events are "naturally bundled" in the ordinary course of business.
• Composite Supply: When services are naturally bundled, they are considered a composite supply, and the GST rate is based on the main service provided.
• GST Rate Application: If the room tariff does not exceed ₹7,500 per unit per day, the composite supply of renting premises along with catering services qualifies for a reduced Under the provisions of Notification 11/2017-Central Tax (Rate), dated June 28, 2017 (as amended), the applicable GST rate is 5%, with no entitlement to Input Tax Credit.

Conclusion

The AAR ruled that when Tollygunge Club Ltd. provides a bundled service of renting premises along with catering for events, and the room tariff is below ₹7,500, the entire service qualifies as a composite supply taxed at 5% GST without ITC.

Implications for Event Service Providers

This ruling provides clarity for businesses offering bundled event services:

• Composite Supply Advantage: Bundling services like venue rental and catering can qualify as a composite supply, attracting a lower GST rate, provided conditions like room tariff thresholds are met.
• Importance of Documentation: Clear contracts and invoices indicating the bundling of services are crucial to substantiate the nature of the supply.

Awareness of Conditions: Providers must be aware of specific conditions, such as room tariff limits, to apply the appropriate GST rate.

If you require assistance on GST services, Manthan Experts can be your trusted advisor. Contact them at info@manthanexperts.com. to discuss your specific needs and explore how their expertise can benefit your business.