With the rapid growth of corporations in India, catering business demand has increased. In today's world, catering businesses provide their services to a wide range of companies, factories, malls, colleges, schools, hospitals as well as providing employment to lakhs of people as well as providing their services to a large number of businesses. As the Indian economy keeps growing, more malls, IT parks, and factories are being built every year as a result of the steady growth of the economy. There will be an increase in the demand for catering services in the coming years in India as a whole. In this article, we will be discussing some of the legalities of starting a catering business in India.
The Food Safety and Standards Authority of India has decided to extend the deadline for FBOs (Food Business Operators) and distribution agencies to comply with the Food Safety and Standards (Recovery and Distribution of Surplus Food) Regulations, 2019 by several months in light of the COVID-19 pandemic. The deadline for compliance with the legislation has been extended to 1st January, 2021 in a Notification dated June 25th, 2020.
Setting Up the Business Entity:-
Choosing an entity type is the first step in starting any kind of business. Due to the severe penalties for offences under the FSSAI act, it is recommended that a catering business be set up as a limited liability partnership (LLP), private limited company, or one person company. Furthermore, the above-mentioned entities are transferable, so the business or license 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 ₹40 lakhs and capital is less than ₹25 lakhs, as audit would be relieved. If the LLP has a sales turnover of more than ₹40 lakhs of capital contribution in addition to ₹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 ₹2 crores.
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 ₹20 lakhs. When the catering business turnover is more than ₹20 lakhs, GST registration should be obtained and GST payment should commence.
Conclusion
We hope we have provided you with sufficient information regarding your concern; however, if you require additional assistance, please do not hesitate to leave a comment below.
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