Legalities of starting a catering business in India

Last Updated at: Sep 30, 2020
Legalities of starting a catering business in India
In light of the COVID-19 pandemic, the FSSAI has decided to provide additional time to FBOs (Food Business Operators) and distribution agencies to comply with Food Safety and Standards (Recovery and Distribution of Surplus Food) Regulations, 2019. In a Notification dated June 25th June, 2020, the timeline for compliance has been extended till 1st January, 2021.


Due to the rapid growth of corporate in India, there has been a rise in demand for the catering business. Catering businesses today provide their services to a number of companies, factories, malls, colleges, schools, hospitals and so on and also provide employment to lakhs of people. With a steady of Indian economy every year many more malls, IT parks and factories are being built. In the coming years, there will be more demand for catering services in India. In this article, we will be discussing some of the legalities of starting a catering business in India.

Setting up the business entity

The first step in commencing any kind of business is to decide and chose an entity type. Since, the processes of a catering business are covered under the FSSAI act, having severe penalties for offences, it is highly recommended that a catering business be set up as a limited liability partnership (LLP) or private limited company or one person company.  In addition to this, the above-mentioned entities are transferable, so, the business or licenses as a whole can be easily transferred to another individual for consideration. Since the above business entities offer limited liability protection and are transferable, it makes them best for a catering business.

The catering business can be set up as a limited liability partnership (LLP) if the annual sales turnover is less than Rs.40 lakhs and capital is less than Rs.25 lakhs, as audit would be relieved. If the LLP has a sales turnover of more than Rs.40 lakhs of capital contribution in additional of Rs.25 lakhs, then it is superlative to start a private limited company.

It is suggested to not to start a One Person Company as it should compulsorily have to be converted to a private limited company whenever the annual sales turnover crosses Rs.2 crores.

Start Your Food Business

Food business license

The Food Business Operator License is a license which is granted by the Food Safety and Standards Authority of India or FSSAI or that allows the business entity to carry on the activities related to any stage of processing, manufacturing, packaging, transportation, storage, distribution of food, catering services, import and includes food services, sale of food or food ingredients. FSSAI Food Business License is mandatory for a catering business.

To get the FSSAI food business license, the documents related to the incorporation of the business should be submitted along with address proof, identity or residential proof of the promoters and details as per the requirements of application format. The FSSAI food business license for catering businesses is granted by the particular State Government. Hence, the application should be submitted to the regional FSSAI office.

Health trade license

The 11the schedule of the Municipal Corporation Act, 1957 deals about Health Trade License. It came into presence from the concern that public health should be given utmost priority. This license is generally provided by the local civil authorities like the State Municipal Corporation or the State Health Department.

GST tax registration

The catering business should get the GST registration done based on the annual sales turnover and the state of operation. The services of a catering business are covered under GST if the annual services provided by the catering business is more than Rs.20 lakhs. When the catering business turnover is more than Rs.20 lakhs, GST registration should be obtained and GST payment should commence.