How to Save up to 13% GST on Weddings by Planning Wisely
Planning a wedding in India involves a myriad of details, and one of the significant factors often overlooked is the impact of the Goods and Services Tax (GST) on various wedding-related expenses. GST rates can vary significantly depending on the type of service provided, and understanding these rates is crucial for budgeting. This article will explore how strategic planning and service bundling can reduce the GST burden on your wedding budget by up to 13%.
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GST Rates for Wedding Services
GST has been implemented across India to simplify the tax system, making it uniform across all states. However, the rates applied can significantly differ based on the services utilized for a wedding. Here’s a breakdown of typical GST rates for various wedding services:
| Wedding Expenditure Elements | Applicable GST Rate |
|---|---|
| Hiring of Venue | 5% or 18%, depending on the nature of the venue and whether catering is included or not |
| Outdoor Catering (Food and Beverage, excluding alcohol) | 5%; 18% for hotels with a room tariff greater than Rs 7500 per night if part of the venue |
| Air Travel | 5% for economy class and 12% for other than economy class |
| Accommodation | 12%; 18% for premises with room tariff greater than Rs 7500 per room night |
| Wedding Apparel | 12% for items over Rs 1,000; 5% for items under Rs 1,000 |
| Wedding Planning Services | 18% |
| Event Photography and Videography Services | 18% |
| Hairdressing and Barber Services | 18% |
| Face and Beauty Treatment Services, Manicure and Pedicure Services | 18% |
| Tattoo Artists/Parlours, Body Piercing Services | 18% |
| Renting of Equipment for Weddings (cameras, photo equipment, flowers, plants, etc.) | 18% |
| Musical Performances by Artists, Musical Works and Related Services | 18% |
How Can You Save GST on Wedding Costs?
Understanding how GST works is the first step to saving money:
- Service Classification: Determine if the service can be classified as a composite or a mixed supply. Composite supplies (where services are naturally bundled and supplied in conjunction with each other like venue with catering) attract a single GST rate, usually the rate of the principal supply.
- Venue Selection: Choosing a venue with a comprehensive package that includes catering, and possibly décor and photography, can reduce the GST rate to 5%, compared to hiring these services separately at potentially higher rates.
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Detailed Strategies to Reduce GST
Here we discuss several strategies through concrete examples, showing how you can leverage GST regulations to your financial advantage.
Example 1: Venue and Catering
- Scenario: If you hire a venue without catering, the GST charged is 18%. However, if catering is included, the GST might be reduced to 5%.
- Cost-Saving: Suppose the venue costs Rs 2 lakhs and catering also costs Rs 2 lakhs. Separately, the GST on the venue would be Rs 36,000 (18% of Rs 2 lakhs), and on catering, Rs 10,000 (5% of Rs 2 lakhs), totalling Rs 46,000. If combined under one contract, the GST could be Rs 20,000 (5% of Rs 4 lakhs), saving Rs 26,000.
Example 2: Bundling Photography with Venue and Catering
- Scenario: A standalone photography service attracts 18% GST.
- Cost-Saving: If the photography package costing Rs 1 lakh is billed separately, GST would be Rs 18,000. However, if it is naturally bundled with the venue and catering under a single contract, the entire package might attract a lower rate, depending on how the tax authority views the bundle.
Additional Tips for Contract Structuring
- Separate Contracts: When unsure about the benefits of bundling, consider drawing up separate contracts to maintain clarity and possibly avoid a higher bundled GST rate.
- Consultation with a Tax Expert: Given the complexities of GST law, consulting with a tax professional can provide tailored advice, potentially leading to further savings.
Conclusion
By strategically understanding and applying GST rules to the various services involved in a wedding, couples can significantly reduce their tax liabilities. Planning wisely by choosing the right combinations and understanding the implications of composite versus mixed supplies is key to achieving the best financial outcome for your wedding. Remember, every percentage saved on GST can be redirected towards enhancing your special day or even extending your honeymoon!
