No GST on food facility (Canteen Services) provided by a business?

Goods and Services Tax (GST) is a comprehensive indirect tax that was implemented in India on July 1, 2017. This tax system has replaced all previous indirect taxes, including Value Added Tax (VAT), Service Tax, Central Excise Duty, and other local taxes. Since its implementation, GST has been a topic of discussion among businesses of all sizes, especially small and medium-sized enterprises (SMEs) and startups. One of the major concerns for these businesses is whether or not GST is applicable to the food facilities provided by them.

The good news is that businesses that provide canteen services for their employees are not required to pay GST on the value of the food items they provide.

This exemption is provided under the following conditions:

The canteen facility is provided by the business to its employees
The cost of the food items provided in the canteen is included in the employee's salary or wages
The business is not making any profit from the canteen facility

If these conditions are met, the business is not required to register for GST or pay any GST on the food items provided in the canteen facility. This exemption is provided under Notification No. 12/2017-Central Tax (Rate) dated 28th June 2017.

It is important to note that businesses that provide canteen services to their employees must maintain proper records of the food items provided, the cost of the food items, and the salaries or wages of the employees. These records must be maintained for a period of six years from the end of the financial year in which the canteen services were provided.

While the exemption from GST on canteen services is good news for businesses, it is important to note that GST may still be applicable on other services provided by the business. For example, if the business provides catering services to an external client, GST may be applicable on the value of the catering services provided. Similarly, if the business provides any other service or product that is subject to GST, the business must comply with the GST regulations.

It is also important to note that the GST regulations are subject to change, and businesses must stay up-to-date with the latest regulations to ensure compliance. The exemption from GST on canteen services is a welcome relief for businesses, but it is just one aspect of the complex GST system.

Conclusion

In conclusion, businesses that provide canteen services to their employees are not required to pay GST on the value of the food items provided, provided that the conditions mentioned above are met. However, businesses must maintain proper records of the canteen services provided, and must comply with the GST regulations for other services provided by the business. It is important for businesses to stay up-to-date with the latest GST regulations to ensure compliance and avoid any penalties or fines.