This circular provides clarification on the GST rate applicable to supply of food and beverage services by educational institutions to their students, faculty, and staff.

The circular clarifies that there is no conflict between the rate notification prescribing GST on restaurant and catering services and the exemption notification applicable to services provided by educational institutions. While Notification No. 11/2017–Central Tax (Rate) prescribes a GST rate of 5% on supply of food and beverages through canteens, messes, or cafeterias, Notification No. 12/2017–Central Tax (Rate) specifically exempts all services provided by an educational institution to its students, faculty, and staff.

It is clarified that supply of food and beverages by an educational institution itself to its students, faculty, and staff is covered under the exemption at Sl. No. 66 of Notification No. 12/2017 and is therefore exempt from GST with effect from 1 July 2017. The exemption applies based on the description of service and is not affected by the indicative service classification codes mentioned in the notification.

However, where the supply of food and beverages is made by a third party, such as a contractor or caterer, under a contractual arrangement with the educational institution, such supply is taxable at the rate of 5% under GST.

To remove ambiguity, the circular also notes that the words “school, college” have been omitted from the relevant rate notification and corresponding amendments have been made to the exemption notification to clearly reflect the legislative intent