Gst rate on canteen services

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 April 2018 Can somebody help me understand what is the rate of GST on Canteen Services (company taking canteen services for its employees and deducting the same from their salaries).
The HSN Code 9963 has the rate of 5% with no ITC for supply of food etc provided in restaurant, eating joint including mess, canteen (I focus here on the word 'Canteen' alone). Whereas the HSN Code 996333 has a rate of 18% for "Services provided in in Canteen and other similar establishments".

Please clarify as to what holds precedence- HSN Code Heading 9963 or HSN Sub-Heading 996333 ?

On a more practical level, if the Canteen Service provider is charging 18%, can we ask him to charge 5% instead?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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07 July 2024 The GST rates applicable to canteen services provided by a company to its employees can be a bit nuanced based on how these services are classified. Here’s a clarification based on the HSN codes you mentioned:

1. **HSN Code 9963:**
- This category covers services provided in restaurants, eating joints, including mess and canteens.
- The rate under this heading is 5% GST with no input tax credit (ITC). This rate is applicable to services provided in canteens as well.

2. **HSN Sub-heading 996333:**
- Specifically, this sub-heading mentions "Services provided in canteens and other similar establishments."
- It states a rate of 18% GST.
- This sub-heading seems to specify a higher rate, potentially for certain types of canteen services or specific conditions not covered under the broader category of canteen services under HSN Code 9963.

**Precedence and Applicability:**

- **HSN Code 9963** encompasses canteen services as part of services provided in restaurants, eating joints, and similar establishments. The rate specified here is 5% GST.
- **HSN Sub-heading 996333** appears to specify a higher rate of 18% GST specifically for services in canteens and similar establishments.

**Practical Application:**

- Based on the information provided, if your canteen service provider is charging 18% GST, you may inquire if they are aware of the specific classification under HSN Code 9963, which allows for a lower rate of 5% GST.
- You can request them to charge 5% GST instead, as long as the services they provide fall under the category covered by HSN Code 9963 (services in canteens as part of restaurants, eating joints, etc.).

**Conclusion:**

- The HSN Code 9963, which includes canteen services under the broader category of services in restaurants and eating joints, specifies a rate of 5% GST.
- The sub-heading 996333, with a rate of 18% GST, likely applies to more specific or different types of canteen services not covered under the general category of canteen services under HSN Code 9963.

Always ensure to verify the nature of services being provided and consult with a GST professional if there is any uncertainty or specific conditions that might affect the GST rate application.

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