1. Event management companies in India are subject to a service tax rate of 12.36% and must obtain relevant registrations and permits such as a PAN card and TAN card. 2. There are different tax implications for different types of business entertainment expenses such as client entertainment, staff entertainment, and subsistence. Value added tax, corporation tax, and income tax may apply differently based on the type of expense. 3. When hosting a New Year party, various permits such as a license for loud speakers, license for serving liquor, no objection certificates, and permission from the local police station may be required. Safety and security of attendees should also be ensured.

1. EVENT MANAGEMENT SERVICE
Definition and scope of service:
(i) "Event Management" means any service provided in relation to planning, promotion,
organizing or presentation of any arts, entertainment, business, sports, [marriage] * or any
other event and includes any consultation provided in this regard;
(Section 65(40) of the Finance Act, 1994)
(ii) "Event Manager" means any person who is engaged in providing any service in
relation to event management in any manner; (Section 65(41) of the Finance Act, 1994)
“Taxable Service” means any service provided or to be provided, [to any person], by an
event manager in relation to event management. (Section 65 (105) (zu) of the Finance Act,
1994)
Rate of Tax & Accounting Code:
Rate of Tax Accounting Code
Service Tax 10% of the value of 00440197
services
Education Cess 2% of the service tax 00440298
payable
Secondary and 1% of the service tax 00440426
Higher Education payable.
cess
Other – As levied or applicable 00440198
Penalty/interest
(Rate of tax is effective from 24.02.2009.)
Following taxes are to be paid by an event management company. Income Tax, TDS (Tax
deducted at source), service tax, entertainment tax and taxes related to moving goods and
merchandise from one destination to others. Get PAN card to file Income Tax return. TAN card
to file TDS return. Get registration for service tax. The service tax on event management
companies in India is 12.36%
CORPORATE BASED ENTERTAINMENT EVENTS
Tax rules can be confusing when dealing with business entertaining expenses. Below are
examples of the three main types of business entertainment and their tax implications.
The three types are client entertaining, staff entertaining and subsistence.

2. Reclaim Offset Corp Avoid Income Tax &
Example Type
VAT Tax NICs
Client
Meal with client No No Yes
entertainment
Drinks for
Yes No No Staff entertainment
employees
Hotel for employee Yes Yes Yes Subsistence
There are different types of tax involved. We will look at the implications of these in turn.
1. Value added tax
2. Corporation tax
3. Income tax and National insurance contributions
1. Value added tax
Reclaiming VAT on Business Entertainment
You cannot reclaim VAT on business entertainment. Business entertainment is defined as any
form of free or subsidised entertainment or hospitality to non-employees.
You can reclaim VAT on employee expenses and entertainment expenses if those expenses relate
to travel and subsistence or where you entertain only employees.
VAT: Examples of non-tax allowable business entertainment
i.e. business entertainment for non-employees:
food and drink
accommodation – eg hotels
theatre and concert tickets
sporting events and facilities
entry to clubs and nightclubs
use of capital assets such as yachts and aircraft
payments made to third party business entertainment organisers
free samples
business gifts
when you provide entertainment or hospitality only for the directors or partners of your
business
2. Corporation Tax
An expense is tax allowable for corporation tax purposes if it is wholly and exclusively used for
business purposes. An exception to this rule is business entertainment.

3. Business entertainment is not allowable for corporation tax purposes. There are of course a
couple of exceptions to the rule.
Corporation Tax: Examples of tax allowable business entertainment
Staff entertainment
Subsistence
Sponsorship if wholly and exclusively for the business
3. Income Tax and National Insurance Contributions
Income tax and employee NICs (Class 1) are a tax on the employee whereas employers NICs
(Class 1a) are a tax on the employer.
The basic rule is that if you provide an employee with anything other than pay it may count as an
expense or benefit.
Expenses that are wholly, exclusively and necessarily incurred in the performance of duties are
not subject to income tax and NICs. For example staying in a hotel on a business trip
(subsistence) does not attract these taxes.
When an employee receives a benefit in kind they may be liable to tax on that benefit.
Entertainment is a benefit in kind and has the following implications.
Example Income Tax Due Class 1 NICs Due
Employer entertains a client No No
Employer entertains an employee Yes Yes
TDS
The best way to make a differciation in 194J and 194C is to bifurcate between Contractual
amount and professional Charges. I.e. Procure a bill from the event management in a way which
specifies Total amount towards contract expenses (which will attract TDS @ 2%/1% u/s 194C)
and Event Management Charges (Which will attract TDS @ 10% u/s 194J)
POLICE PERMISSION
Permission for your loudspeaker: According to the Noise Pollution (Regulations and
Control) Rules 2000, a loudspeaker or a public address system shall not be used at night
between 10 p.m. to 6 a.m. But New Year is special case where concerned authority
allows you to play music or use loudspeaker for your New Year party. For conducting
pooja / birthday party / family get-together or religious ceremony at your residence, you
don’t require a premises or performance license. However, if you intend to use a
loudspeaker, you will have to make an application to the concerned Police station. The

4. authorities do not permit loudspeaker in silence zone. Silence Zone is an area comprising
not less than 100 meters around hospitals, educational institutions, courts, religious places
or any other area which is declared as such by the competent authority.
License for serving liquor in parties: A consumer is allowed to keep 18 liters of
IMFL/Beer (in any proportion) at his residence at a time for bonafide consumption by
him and family members/guests. For higher possession, he can apply to the Department
for a permit for which a fee of Rs. 2000/- is charged. For serving liquor in the party,
association or club has to get special or temporary excise license. Temporary Excise
License is issued for parties hosted by individual (L49A) and Licensed Hotel, Club,
Restaurant inside their premises (L20).
Parking Space: Lack of parking space is one of the problems facing in developing cities.
Police and concerned authorities limit the parking or restrict the entry of certain vehicles
on New Year eve. If you are planning to organize or host a New Year party in your
apartment and planning to invite your friends, relatives or colleagues, ensure that your
apartment provides parking space for their vehicle.
No Objection Certificate: For organizing or hosting a New Year party you need to get
No Objection Certificate (NOC). If you are organizing party in your apartment, you
need to get NOC from your landlord or neighbors in your apartment and from
apartment owners association. If apartment owners association is conducting or hosting
the New Year party, they will have to get NOC from its members and residents in
apartment.
Other NOC required for your organizing or hosting New Year party are
NOC from property manager or Apartment Owners Association
NOC from concerned Police station,
NOC from Fire Brigade,
NOC from Electrical Inspector,
NOC from Health Department of BMC (if eatables are being served)
Safety and security: If your event management has been outsourced to an external co-
coordinator, ask for, and review their risk assessment plan. Make sure you have
emergency medical aid and review arrangements to ensure the safety and security of
the attendees. Taking a personal interest in the arrangements even if you have outsourced
them will ensure that everything gets your personal attention. In the party serving liquor,
woman and girls safety should be given higher priority. Teens and college girls should
never travel alone on New Year eve.
The preparation should start well in advance, if one is to avoid last minute crunches and party-
fright. The best way to save time and effort is to plan a menu that is no fuss, healthy and tasty-

5. something that the guests enjoy eating. Get NOC from concerned authority and ensure the safety
and security of the attendees.