Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: due date for vat payment :: empanelment :: TDS :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: Central Excise rule to resale the machines to a new company :: VAT RATES :: ACCOUNTING STANDARDS :: ACCOUNTING STANDARD :: VAT Audit :: articles on VAT and GST in India :: cpt :: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
 
 
« Service Tax »
 Credit Note And Debit Note Under Gst
 Demonetisation hits service tax, excise duty collection
 GST on a knife-edge as states act tough
 Parliament Winter Session: Govt keen on proper discussion on GST Bills
 Service Tax revision to make digital content expensive: Here’s how it will impact you
 GST Council may reduce tax slabs in future: CBEC chief
 Govt to waive service tax on card transactions up to Rs 2,000
 Recovery Of Tax Under Model Gst Law
 Income Tax officials hunt for Mumbai’s ‘ghost’ assessee
 GST delay to impact Budget
 If GST not rolled out by Sept, there won't be taxation in country, warns Jaitley

How not to get confused between service tax and service charge
December, 15th 2015

We all love to visit restaurants. Love to have the delicious mouth watering food but what we forget is the amount being paid by us. Without understanding the difference between service tax and service charge we pay it whole heartedly.

But be aware of these hospitality lies that have been covering your eyes. Yes... Many of them are cheating you by levying unnecessary charge.

From now onwards, if you want to have dinner outside, do remember to have a closer look at the bill.

The government had recently modified service tax policy, which should ideally have cut down the overall food bill. But, to one’s surprise, the changes are not visible in the bill.

Generally, there are two types of taxes that is levied on your food bill, namely value added tax (VAT) and service tax, besides service charge.

According to a Finance Ministry notification, from June 1, 2015, restaurants that have air conditioner or central heating facility will attract service tax of 14 per cent. The tax will be applicable on 40 per cent of the total bill amount.

But,it is found that restaurants have been charging customers on the full value (total bill amount).

On July 14, the government of India made it clear that service charges which are collected and retained by the restaurant are not imposed from the government’s side. The only taxes that are imposed by the government are service tax and VAT (that also differs state-wise).

Have a look and know the difference between service tax and service charge so that you don’t get cheated:

Service tax

The most important thing about the service tax is that it is only charged on 40% of the total bill. Hence, if you have to pay the bill of Rs. 1000, the service tax that will be charged should be on Rs. 400 (which is 40% of 1000).

To make the things easier for themselves, the restaurants need to charge service tax on the total amount, therefore reducing the amount to only 5.6% of the bill.

It is charged by the restaurants for the services being offered. As there are no guidelines provided by the tax authority, they charge as they feel like. The charges may vary from 5% to 20% (depends restaurant to restaurant).

In some cases, the money from service charge is mutually shared among the waiters (staff) in the form of a tip; here you are not required to give tip to the waiter.

Note the difference between the two charges: Always remember that service tax is what you pay to the government and the correct amount that you have to pay is 5.6% of the total bill OR 14% on 40% of your total bill.

Ground Rule: If the menu states a service charge is added, then there is no question arguing it- you have to pay it. But you can put forth your question to the restaurant that if the charge is used as a tip mechanism or if it will be mutually shared by everyone in the restaurant.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Outsourcing Test Solutions Software Testing Software Bug Testing Software Issues Tracking Software Issue Fix Software Code Optimization Database Design Optimization

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions