Service Charges are not Service Taxes, clarifies government
Posted on: 15/Jul/2015 5:31:37 PM
The government has come forward to clarify that the service charges imposed by restaurants, hotels and other eateries like the restaurants and hotels are not the service tax imposed by government.
In addition to the charges for food or beverage, there are few hotels that charge in addition as service charges in their bills. In a press release by the Ministry of Finance, it is said that the ‘service charge’ is retained by the hotel, restaurant or eateries by themselves. There are few consumers who mistake this as the service charge collected on behalf of the government as tax.
The press release also added that such service charge are only retained by restaurants or hotels and are not imposed by the government.
It was also clearly mentioned that the service tax provided in eateries, restaurants or eating joints with a facility of air-conditioning or central air-heating is about 5.6 per cent (which is 14 per cent of 40 per cent) of the total bill amount.
It was from 1st of June that the new service tax rate of 14 per cent came into effect as per which the restaurants, insurance and phone bills were made as costly as others.
