Vat & service tax on catering and tiffin services

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yashsr (Querist)
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06 April 2013 Hello,

A Proprietor has entered into Catering Services and Tiffin Services in Mumbai. It has a kitchen where it cooks lunch/dinner/snacks and packs the same in tiffins and supplies. Also, it undertakes Corporate Catering and Catering in marriages etc. Will this attract Service Tax and Maharashtra VAT?

CA LOKESH KASAT, FCA, M.Com

CA LOKESH KASAT, FCA, M.Com (Expert)
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06 April 2013 Yes it will attract both Service tax as well as VAT.

However abatement is available under service tax for caterers

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yashsr

yashsr (Querist)
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09 April 2013 Hello,

Can you please elaborate? What is the amount of abatement in Service Tax? And what is the % of abatement in VAT? What about Composition Scheme?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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03 August 2025 Sure! Here’s a detailed explanation about **VAT and Service Tax on Catering and Tiffin Services** in Maharashtra (Mumbai):

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### 1. **Service Tax on Catering & Tiffin Services**

* **Applicability:**
Catering services (including corporate catering, marriages, events, and tiffin supply) are covered under **“Food and Beverage Service”** or **“Restaurant Services”** in the Service Tax regime (now GST replaced service tax, but as per older laws).

* **Abatement:**
Service Tax provides **abatement** (a deduction from gross value to arrive at taxable value) for catering services because some part of the value is considered as the value of goods (food) supplied.

* **Abatement % for Catering:**
Usually, **60% abatement** is allowed on the gross amount charged for catering services.

* This means **only 40% of the total amount charged is taxable** for Service Tax.

* **Example:**
If total bill = ₹100, then taxable value for Service Tax = ₹40 only.

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### 2. **VAT on Catering & Tiffin Services**

* **Applicability:**
VAT applies on the **sale of goods** (i.e., the food items sold).

* **Tiffin Service:**
Since tiffins are packed food supplied for consumption, VAT is charged on the **value of goods** sold (the food items).

* **Catering at Events / Corporate Catering:**
For catering services at events, VAT is levied on the **food goods** supplied.

* **VAT Rate:**
In Maharashtra, VAT on food items supplied by caterers is usually **5%**, but the exact rate depends on the type of food items.
(Some prepared food items might attract higher VAT depending on category.)

* **Composition Scheme:**

* For small catering businesses, Maharashtra provides a **Composition Scheme** under VAT where you pay a fixed percentage (like 5%) on turnover without detailed tax credit claims.
* This scheme is optional and meant to simplify VAT compliance.

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### **Summary Table**

| Tax Type | Taxable Value | Rate/Abatement |
| ------------------- | --------------------------------------------------------- | -------------------------------------- |
| **Service Tax** | 40% of total invoice value (after 60% abatement) | Standard service tax rate (before GST) |
| **Maharashtra VAT** | Value of food goods supplied (usually full invoice value) | 5% (subject to item category) |

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### Important Notes:

* **Service Tax is on service portion only**, and VAT is on goods (food) portion.
* You must issue **separate invoices** showing service and goods value clearly.
* After GST implementation (post-2017), catering services and supply of food are covered under GST, where integrated tax is applicable.

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If you want, I can help prepare a sample invoice showing VAT and Service Tax breakup for catering/tiffin services. Would you like that?

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