CHENNAI: If you think you are being overcharged on your restaurant bill and think it’s because of the 14 per cent service tax, give your food bill another hard look. The Central Government on Wednesday stated clearly that service tax for restaurants, hotels and eateries would be only 5.6 per cent and not 14% of the total bill amount.
In a statement, the Government said many consumers were confused between service charge and service tax mentioned on restaurant bills.
Some restaurants, hotels, eateries besides charging for food and beverages were also slapping ‘service charges’ on their bills. The collection from the ‘service charges’ were retained by the restaurants, hotels, eateries, and were not service tax, said the statement.
More important, the government made it clear that the effective service tax rate for services provided at an air-conditioned restaurant was only 5.6 per cent.
“The effective service tax rate in respect of services provided in relation to serving of food or beverage by a restaurant, eating joint or mess having the facility of air-conditioning or central air-heating is 5.6 per cent. That is, 14 per cent of 40 per cent of the total amount,” it said.
Any extra component, according to the government, is the service charge by the restaurant on the customer.