Indian businesses engaged in the export of goods often enjoy various incentives such as Duty Drawback, RoDTEP (Remission of Duties and Taxes on Exported Products), and RoSCTL (Rebate of State and Central Taxes and Levies). However, when it comes to exports of services, especially niche categories like catering services provided to foreign clients, there is significant ambiguity and a common query arises:
“Do catering service exports qualify for any of the same government incentives or remissions that are available for export of goods?”
Let us examine this with reference to law, relevant sections, interpretations, and practical implications.
Understanding the Nature of Catering Service Export
Catering services involve providing food and beverage arrangements, typically including service staff and event-based execution. When such services are rendered to a recipient outside India, and the payment is received in convertible foreign exchange, the activity may qualify as an ‘export of service’ under the IGST Act, 2017.
Legal Framework: What Qualifies as an Export of Service?
Section 2(6) of the IGST Act, 2017:
A service is treated as an export of service if it satisfies all the following conditions:
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The supplier of service is located in India.
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The recipient is located outside India.
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The place of supply is outside India.
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Payment is received in convertible foreign exchange (or in INR where permitted by RBI).
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The supplier and recipient are not merely establishments of the same person.
Place of Supply in Service Transactions – Section 13 of the IGST Act:
For services provided to a foreign recipient, Section 13(2) generally provides that the place of supply is the location of the recipient, unless a specific provision applies.
In the case of catering or event-related services, however, Section 13(5) applies:
“The place of supply shall be the location where the services are actually performed.”
Thus, if the catering is performed in India, even for a foreign recipient, the service does not qualify as export, since the place of supply is within India.
However, if the catering service is performed outside India—for example, a company in India sends its team abroad to execute catering for an international event—then the place of supply is outside India, and all five export conditions may be fulfilled.
Can Catering Services Get Duty Drawback, RoDTEP, or RoSCTL?
Here is the key differentiation:
| Scheme | Governing Law | Applicable To | Catering Service Exports? |
|---|---|---|---|
| Duty Drawback | Section 75, Customs Act, 1962 | Export of goods | ❌ Not applicable |
| RoDTEP | FTP and Customs Notifications | Export of goods | ❌ Not applicable |
| RoSCTL | Textile Policy via Customs route | Textile goods export | ❌ Not applicable |
These schemes are exclusively meant for export of goods, designed to neutralize the embedded taxes and duties in goods manufacturing and logistics chain. Services do not suffer such embedded input taxes in the same manner, hence do not qualify.
The Foreign Trade Policy (FTP 2023) and respective CBIC notifications do not extend RoDTEP or Drawback schemes to services, including catering.
Are There Any Incentives for Export of Services?
Yes, but under different legal routes:
1. Zero-Rated Supply under GST – Section 16 of the IGST Act, 2017
Catering services exported under Section 2(6) can be treated as zero-rated if conditions are fulfilled.
This allows the exporter to:
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Claim refund of unutilized Input Tax Credit (ITC) under Rule 89 of CGST Rules
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Or export under LUT (Letter of Undertaking) without paying IGST and claim refund of ITC
However, if catering is performed in India, refund is not available as it is not export.
2. Foreign Trade Policy: SEIS (Historical)
Earlier, under the Service Exports from India Scheme (SEIS), certain services were rewarded with scrip-based incentives. However, SEIS was discontinued under the FTP 2023.
3. Special Economic Zones (SEZs)
If the catering unit operates from an SEZ and renders services to a foreign client, additional benefits may be available under the SEZ Act, 2005, subject to approval of the Development Commissioner.
What Is the Best Legal Strategy to Get Benefits?
1. Classify and structure the transaction properly:
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If your catering service is physically delivered abroad (e.g. wedding in Dubai served by Indian caterer), document evidence to show services were rendered outside India.
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Include performance location, travel invoices, event contracts, and foreign currency payment receipts.
2. Export under LUT for zero-rated supply:
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File Letter of Undertaking (RFD-11) with the GST department.
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Export without payment of IGST and claim refund of input tax credits.
3. Consider operating through SEZ if scale justifies.
4. Explore foreign collaboration or project catering models where actual delivery is offshore and qualifies under Section 13(5) as place of supply abroad.
5. Monitor future schemes:
The upcoming FTP and Budget announcements may reintroduce or redesign incentive structures for service exports. Industry associations are urging for a RoSSE (Remission of State & Central Taxes on Services Export) scheme similar to RoDTEP for services.
Conclusion
Catering services rendered to foreign clients may qualify as export of service only if they are performed outside India. However, they do not qualify for RoDTEP, Duty Drawback, or RoSCTL, which are strictly meant for goods.
The key legal incentive currently available is zero-rated status under Section 16 of the IGST Act, allowing GST refund of input credits. Exporters must ensure compliance with place of supply provisions under Section 13(5) and document foreign performance to legally claim these benefits.
Author’s Note:
As India’s services exports surge, especially in high-value experiential segments like destination catering, there is an urgent need for the government to extend a parallel tax remission scheme for services. Until then, exporters must structure operations to ensure legal export classification and claim refunds wherever eligible.
