Rate of composition in case of activity at a restaurant or a
This query is : Resolved
03 July 2012
Dear Experts,
Rate of composition in case of activity at a restaurant or as outdoor catering:
a. In case of Restaurant, pay service tax on 40% value.
b. In case of Outdoor Catering, pay service tax on 60% value.
In both the cases, service provider is eligible to avail CENVAT Credit of inputs (except goods classifiable under Chapters 1 to 22 of CETA), input services and capital goods.
1.Could you please elaborate the following amendment?
2. In what situation Cenvat Credit will be available?
Kindly give yours suggestions.
Rate of composition in case of activity at a restaurant or as outdoor catering:
a. In case of Restaurant, pay service tax on 40% value.
b. In case of Outdoor Catering, pay service tax on 60% value.
In both the cases, service provider is eligible to avail CENVAT Credit of inputs (except goods classifiable under Chapters 1 to 22 of CETA), input services and capital goods.
1.Could you please elaborate the following amendment?
2. In what situation Cenvat Credit will be available?
Kindly give yours suggestions.
03 July 2012
3. What is inculded in Chapter 1 to 22?
19 July 2025
1. Service Tax Composition Rates for Restaurant & Outdoor Catering
Restaurant Services:
Under the service tax composition scheme (as of 2012), restaurant service providers pay service tax on 40% of the gross amount charged (i.e., effective tax on 40% of bill value).
This means tax is calculated on 40% of the bill amount.
Outdoor Catering Services:
For outdoor catering service providers, tax is paid on 60% of the gross amount charged.
So, service tax is applicable on 60% of the invoice value.
2. CENVAT Credit Eligibility
The service provider can avail CENVAT Credit on inputs, input services, and capital goods used in providing the taxable service.
Exception: Goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act (CETA) are not eligible for CENVAT credit.
This means any inputs like food grains, vegetables, fruits, edible oils, beverages (falling under Chapters 1 to 22) used in restaurants or catering cannot be credited.
3. What is included in Chapters 1 to 22 of CETA?
Chapters 1 to 22 primarily cover agricultural products, foodstuffs, and raw materials like:
Chapter 1-5: Live animals, animal products (e.g., meat, dairy)
Chapter 6-14: Vegetables, fruits, edible plants, oils
Chapter 15: Animal/vegetable fats and oils
Chapter 16: Prepared foodstuffs (fish, meat preparations)
Chapter 17: Sugars and confectionery
Chapter 18: Cocoa, chocolate
Chapter 19: Cereal products, pasta
Chapter 20: Preparations of vegetables, fruits
Chapter 21: Miscellaneous edible preparations
Chapter 22: Beverages, spirits, vinegar
In simple terms, these are mostly raw food ingredients and beverages.
4. Summary:
Aspect Details
Restaurant Tax Base 40% of gross amount
Outdoor Catering Tax Base 60% of gross amount
CENVAT Credit on Inputs Allowed except goods under Chapters 1-22 of CETA
Examples of Excluded Goods Food grains, vegetables, edible oils, beverages etc.
Additional notes:
This composition scheme simplifies tax calculation for restaurants and caterers.
CENVAT credit helps reduce tax burden on capital goods and input services, but raw food inputs remain non-creditable.
Always maintain proper invoices for claiming CENVAT credit.
Restaurant Services:
Under the service tax composition scheme (as of 2012), restaurant service providers pay service tax on 40% of the gross amount charged (i.e., effective tax on 40% of bill value).
This means tax is calculated on 40% of the bill amount.
Outdoor Catering Services:
For outdoor catering service providers, tax is paid on 60% of the gross amount charged.
So, service tax is applicable on 60% of the invoice value.
2. CENVAT Credit Eligibility
The service provider can avail CENVAT Credit on inputs, input services, and capital goods used in providing the taxable service.
Exception: Goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act (CETA) are not eligible for CENVAT credit.
This means any inputs like food grains, vegetables, fruits, edible oils, beverages (falling under Chapters 1 to 22) used in restaurants or catering cannot be credited.
3. What is included in Chapters 1 to 22 of CETA?
Chapters 1 to 22 primarily cover agricultural products, foodstuffs, and raw materials like:
Chapter 1-5: Live animals, animal products (e.g., meat, dairy)
Chapter 6-14: Vegetables, fruits, edible plants, oils
Chapter 15: Animal/vegetable fats and oils
Chapter 16: Prepared foodstuffs (fish, meat preparations)
Chapter 17: Sugars and confectionery
Chapter 18: Cocoa, chocolate
Chapter 19: Cereal products, pasta
Chapter 20: Preparations of vegetables, fruits
Chapter 21: Miscellaneous edible preparations
Chapter 22: Beverages, spirits, vinegar
In simple terms, these are mostly raw food ingredients and beverages.
4. Summary:
Aspect Details
Restaurant Tax Base 40% of gross amount
Outdoor Catering Tax Base 60% of gross amount
CENVAT Credit on Inputs Allowed except goods under Chapters 1-22 of CETA
Examples of Excluded Goods Food grains, vegetables, edible oils, beverages etc.
Additional notes:
This composition scheme simplifies tax calculation for restaurants and caterers.
CENVAT credit helps reduce tax burden on capital goods and input services, but raw food inputs remain non-creditable.
Always maintain proper invoices for claiming CENVAT credit.
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