CBIC Clarifications on GST Applicability for Certain Services: Circular 201/13/2023

The CBIC is addressing requests for clarifications on GST applicability for specific services. The requests include queries on:

i) Applicability of Reverse Charge mechanism if a company director offers services, like property rental, to the company or a corporate entity in his individual capacity.

ii) Taxability of food or beverage provision in a cinema hall as a restaurant service.

CBIC GST Circular 201/13/2023 dated August 1, 2023: Clarifications on GST Applicability for Certain Services (Property Renting Director, Food & Beverage in Cinema)

CBIC has issued clarifications on these specific issues based on the recommendations of the GST Council, as detailed here-under:

CBIC Clarifications on GST Applicability for Certain Services: Circular 201/13/2023

1. Whether services provided by a director of a company are covered by RCM?

The query revolves around whether services provided by a company’s director, in a personal capacity like leasing out immovable property, are subject to Reverse Charge Mechanism (RCM). As per Central Tax Rate Notification 13/2017, Item 6, dated 28.06.2017, a company or a body corporate must pay tax for services offered by its director under RCM. However, CBIC has clarified that director’s services supplied in a personal capacity, for instance material property renting, are not taxable under RCM. Only the services a director offers when acting in that role are taxable under RCM and the tax should be paid by the company or body corporate for such services only as per the cited Notification.

2. Whether Supply of Food or Beverages in Cinema Hall is Taxable as Restaurant Service:

CBIC has clarified concerns about the GST categorization of food and beverage offerings at cinema halls. According to Central Tax Rate Notification 11/2017 dated 28.06.2017, Para 4 (xxxii) explains that “Restaurant Service” includes the provision of food, drinks, or other consumables as part of a service in various establishments including cinemas.

Film operators may manage their own food stations or entrust them to third-party contractors, with patrons having the choice to use these facilities. Cinemas might also offer auxiliary recreational services. However, CBIC has firmly indicated that the sale of food and drinks within a cinema hall falls under ‘restaurant service’ and attracts a 5% GST, provided it is offered independently of the film exhibition.

In the instance where the cinema ticket sales and the provision of food and drinks are bundled and fulfill the conditions of a composite service, the entire supply will be taxed at the film exhibition service rate, as it forms the principal supply.


CBIC has delivered key clarifications on GST applicability for specific services. For a company director’s personal services, like renting immovable property, CBIC noted that these don’t fall under the Reverse Charge Mechanism (RCM). Only the director’s services in an official capacity are taxable under RCM. CBIC also tackled the taxability of cinema hall food and beverage supply. This is taxable as a ‘restaurant service’ under set conditions, for example, if offered independently of cinema screening. But, if cinema tickets and food/drinks supply constitute a composite supply, the whole supply gets taxed according to the cinema exhibition service rate.

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