GST Rate for Outdoor Catering Services: TN/27/ARA/2026 Explained
Outdoor caterers not in specified premises must pay 5% GST without claiming input tax credit.
- Ruling
- Advance Ruling No. 27/ARA/2026, dated 26.03.2026
- Dated
- 26 Mar 2026
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Outdoor catering services are taxed at a mandatory 5% GST rate.
- Businesses cannot choose to pay 18% GST to claim input tax credit.
- The ruling applies to both full-service catering and simple food delivery models.
- The applicable HSN code for these services is 996334.
In short
The company asked if they could choose between paying 5% GST without input tax credit or 18% GST with input tax credit for their catering services. The Authority for Advance Ruling decided that the 5% rate is mandatory for outdoor caterers who do not provide hotel accommodation or operate in specified premises.
What has changed
How it worked before
Many businesses were unsure if they could opt for the higher 18% tax rate to benefit from input tax credit, treating the 5% rate as an elective concession rather than a fixed rule.
What has changed
The authority clarified that the 5% rate is a fixed requirement for this category of service. This means businesses in this sector must stop claiming input tax credit on their purchases, as the lower tax rate is tied to the condition of not availing credit.
Who this affects
Outdoor catering businesses that do not provide hotel accommodation or operate within specified premises like luxury hotels.
An example
A catering business in Chennai provides food for weddings without hotel accommodation. They previously paid 18% GST and claimed input tax credit on their raw materials. Based on this ruling, they must now switch to the 5% GST rate and stop claiming input tax credit to remain compliant.
What you should do
If you are an outdoor caterer, you must apply the 5% GST rate and forgo input tax credit. Remember that an Advance Ruling is only binding on the business that requested it and their specific tax office; it is not a law that automatically applies to your business.
If you do nothing
If you assume this ruling applies to you and continue to claim input tax credit while paying only 5% GST, you risk a tax audit. A tax officer may demand the reversal of incorrectly claimed credits, along with interest and potential penalties for non-compliance.
The terms explained
- Input Tax Credit
- The tax a business pays on its own purchases that it can use to reduce the tax it owes on its sales.
- Composite Supply
- A bundle of goods or services provided together that are naturally bundled and supplied in the ordinary course of business.
- Specified Premises
- Locations like luxury hotels or convention centers that have different tax rules compared to standard outdoor catering venues.
The ruling in detail
Authority for Advance Ruling
M/s. Friends Catering CBE
Advance Ruling No. 27/ARA/2026, dated 26.03.2026 · Tamil Nadu
Questions before the authority
- Whether we, Friends Catering (GSTIN: 33AAHFF4730D1ZW) being outdoor caterers not providing hotel accommodation or located in specified premises, providing outdoor catering services, which include both catering and labour services involvement (Composite) have the option to either: a) Pay GST at the rate of 2.5% CGST and 2.5% SGST without availing Input Tax Credit (ITC), or b) Pay GST at the rate of 9% CGST and 9% SGST with availing ITC, as per Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 20/2019-Central Tax (Rate) dated 30.09.2019, effective from 01.10.2019.
- What is the applicable GST rate for food supply services provided for occasional events, where no labour or on-site services are involved, and the food is prepared at our own premises and transported to the recipient's location at their own risk?
- What is the applicable HSN Code?
Facts
The applicant is engaged in providing outdoor catering services for occasional events at various venues like marriage halls and exhibition halls. They operate under two models: one involving the supply of prepared food with on-site manpower and event support, and another involving the supply of prepared food without any on-site labour or catering activity. The applicant does not provide hotel accommodation and is not located in specified premises.
Ruling
| Question | What the authority ruled |
|---|---|
| Option to pay 5% GST (no ITC) or 18% GST (with ITC) | Applicant must pay 5% GST (2.5% CGST and 2.5% SGST); no option for 18% GST. Condition: Credit of input tax charged on goods and services used in supplying the service has not been taken. |
| GST rate for food supply without labour/on-site services | 5% GST (2.5% CGST and 2.5% SGST). Condition: Credit of input tax charged on goods and services used in supplying the service has not been taken. |
| Applicable HSN Code | 996334 Applicable for both models of supply. |
The Authority ruled that the applicant must pay GST at the rate of 5% (2.5% CGST and 2.5% SGST) for both models of supply, subject to the condition that no input tax credit is availed. It explicitly held that the applicant does not have the option to pay GST at the rate of 18% (9% CGST and 9% SGST) with the availment of ITC. The applicable HSN code for both models was determined to be 996334.
Reasoning
The Authority determined that the applicant's activities constitute a composite supply of services under Schedule II of the CGST Act, 2017. It classified the services under Entry 7(iv) of Notification No. 11/2017-Central Tax (Rate), as amended, which covers outdoor catering at premises other than specified premises. The Authority reasoned that the 5% rate is **mandatory** for this category and that the 18% rate under Entry 7(vi) is not applicable as it is reserved for services other than those listed in entries (i) to (v). Consequently, the applicant cannot choose to pay the higher rate to avail ITC.
Provisions relied on
- Section 2(30) of the CGST Act, 2017
- Schedule II of the CGST Act, 2017
- Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017
- Notification No. 20/2019-Central Tax (Rate) dated 30.09.2019
For the practitioner
This ruling clarifies that for outdoor caterers not operating in specified premises, the 5% GST rate is **mandatory** and precludes the option of paying 18% GST to claim ITC. Practitioners should note that the Authority views the concessional rate as a fixed requirement rather than an elective choice. It settles the tax treatment for both full-service catering and simple food delivery models.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/12-friends_catering_aar_order.pdf
Legibility of the scan, as read: high.
Prepared 12-10-2026.
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