The wedding season brings a whirlwind of celebrations, elaborate venues, and sumptuous feasts. But amidst all the glitz, one factor that often catches couples and families off guard is the impact of Goods and Services Tax (GST) on hospitality, banquet, and catering services. GST is not just another line item on your bill—it can significantly affect your wedding budget. Let’s break a few myths and learn a few handy GST to help you navigate through the season.
GST on Hotel Bookings and Accommodations
Like most weddings these days if your wedding festivities include out-of-town guests or a destination wedding, hotel bookings are likely on your list. Under GST, different tax rates apply to hotel room tariffs based on the room’s nightly rate:
Here’s a neat table showing the GST rates based on room tariff:
| Room Tariff (Per Night) | GST Rate |
| ₹0 – ₹7,500 | 12% |
| Above ₹7,500 | 18% |
GST Rates for Hotels based on Room Tariff (Effective from 18-07-2022 and onwards)
This table helps clarify how GST is applied to hotel room bookings based on the room’s nightly rate, ensuring you can budget accordingly for your accommodations. Be careful while checking the GST rates in your bill. When planning a luxury wedding, it’s wise to account for the added tax on those swanky suites. A tip for budget-conscious couples is to look for hotels with tariffs just below a higher slab, as this can help reduce GST costs.
GST on Banquet Halls and Catering Services
Renting banquet halls for events such as weddings involves different GST rates depending on the nature of services provided. When both “supply of goods” (like food and beverages) and “supply of services” (venue rental and related amenities) are offered as a package, it qualifies as a “composite supply” under GST law. In this case, the entire package is taxed based on the predominant supply, typically the venue rental. While the standard GST rate for banquet services is 18%, a reduced rate of 5% may apply under specific circumstances.
When 5% GST Applies
- Event-Specific Rentals
The reduced 5% GST rate is applicable when the banquet hall is rented specifically for personal events, such as weddings or family functions. The 5% covers the rental of the venue itself, potentially extending to any basic amenities provided as part of the hall rental, such as seating, stage arrangements, or lighting.
- Non-Air-Conditioned Venues
The 5% rate is primarily reserved for non-air-conditioned banquet halls. If the venue is equipped with air conditioning, the GST rate rises to 18%, reflecting the additional luxury and services provided. This distinction aims to standardize tax rates according to the level of amenities offered.
- Bundled Catering Services
When a banquet hall rental is combined with catering services in a single package, the GST remains at 5%, provided the principal supply is considered to be the rental of the hall itself. In other words, the overall nature of the service should focus on providing the venue, with catering seen as an incidental part of the offering. This ensures that the lower GST rate can still be applied even when additional services are included.
- Supplier Compliance
For the reduced rate to apply, the supplier must be registered under GST and fully compliant with applicable tax regulations. This means that the supplier needs to issue a valid GST invoice and follow other procedural requirements, ensuring that the transaction meets all legal standards for taxation at the lower rate.
- Non-Commercial Use
The 5% GST rate is typically applicable when the banquet hall is rented for non-commercial purposes, such as weddings, anniversary celebrations, or other personal events where the primary objective is not profit-making. For commercial events such as corporate functions, trade shows, or exhibitions, the GST rate would usually be higher, often defaulting to 18%.
Special Criteria for the 5% GST Rate
The reduced 5% GST rate only applies if the event takes place at a location other than “specified premises”—which include places with special tax considerations, such as hotels that provide lodging along with venue services. Additionally, the supplier must not be connected to or based within such “specified premises.” In simpler terms, if the banquet hall is part of a hotel offering accommodation services or located within the hotel grounds, the standard GST rate of 18% would apply.
GST on Catering Services
Catering services on their own are taxed at a standard 18% GST rate. This includes charges for food, beverages, and serving arrangements. If the catering service is separate from the banquet hall rental, the GST rate remains consistent. In cases where the catering service is part of a package deal with the banquet hall, it may be included in the overall composite supply, potentially qualifying for the reduced 5% rate if the rental is considered the primary service.
GST on Combined Packages
When banquet hall rentals, accommodation, and catering services are bundled together in one package, the GST calculations can become complex. Each service is taxed based on its individual rate if the invoice itemizes the charges. However, if the venue provides an all-inclusive rate without itemizing each component, it is crucial to ensure clarity on how the GST is applied to avoid any instances of double taxation.
Whether you’re renting a simple hall or booking a luxurious wedding package, understanding GST implications helps you manage costs more effectively. When planning an event, especially one as grand as an Indian wedding, consider clarifying the tax details to avoid surprises and ensure compliance with GST regulations.
Alcohol and GST: An Excluded Category
Here’s where things get interesting: GST does not apply to alcohol. Since liquor falls under state excise duty, it is not covered by GST. So, when you order that signature cocktail or a bar service for the reception, remember that the tax on alcohol will be separate from the GST applied to catering or banquet services.
Input Tax Credit (ITC) for Wedding Planners and Vendors
One aspect of GST that vendors often navigate is the Input Tax Credit (ITC), which allows them to offset the GST they pay on their purchases (like decorations, flowers, or catering supplies) against the GST they charge customers. While this is more relevant to wedding planners and vendors, it’s good for customers to be aware of, especially if they’re dealing with different suppliers and coordinating services on their own.
GST Registration Threshold for Wedding Vendors
Many wedding-related services are provided by small vendors such as local florists, decorators, and photographers. As a customer, it’s important to know that vendors with an annual turnover of less than ₹20 lakh (₹10 lakh for special category states) are not required to register for GST. This means they won’t charge GST on their services. If you’re dealing with smaller vendors, be sure to check their GST registration status to know whether GST applies.
Tips for Managing GST Costs During the Wedding Season
1. Negotiate All-Inclusive Packages: If a venue offers an all-inclusive package (banquet, catering, decoration), ask for a breakdown and negotiate the GST charges accordingly.
2. Book Early to Avoid Higher Rates: Hotels may adjust room tariffs based on demand. Booking rooms early can help lock in rates before a higher GST slab applies.
3. Leverage Vendor Discounts and Input Tax Credit (ITC): If coordinating directly with vendors, ensure they use their ITC benefit to provide more competitive pricing.
4. Double-Check Bills for Correct GST Calculations: Mistakes in GST calculations can occur. Review your bills for any discrepancies in GST rates or double charges.
Planning a wedding may be about love, but managing the budget? That’s a different kind of commitment!
Understanding GST and how it applies to the hospitality, banquet, and catering services can help you navigate wedding expenses more efficiently. With proper planning, transparency in billing, and awareness of the different tax rates, you can make sure the wedding season is a celebration of joy rather than a stress-inducing financial event. So, as you gear up for the wedding bells, remember to keep an eye on the taxman lurking in the background—and plan for a day that’s memorable not only for its festivities but also for its smart financial planning!
Author: Apoorva Lamba, 2nd Year LLB. Student of Madhav Mahavidyalaya, Jiwaji University, Gwalior
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