Service Tax on Hotel Accommodation, Restaurant Services Restructured – Budget 2011-12

Hotel accommodation, in excess of declared tariff of Rs. 1000 per day and service provided by air conditioned restaurants that have license to serve liquor are the new services which have been brought under the service tax net.  While proposing to levy service tax on these services, the Union Finance Minister, Shri Pranab Mukherjee has said that the hotel accommodation with declared tariff of over Rs. 1000 per day will have to pay the service tax with an abatement of 50 per cent.  This will mean an effective burden of only 5 per cent of the amount charged.  Air conditioned restaurants with license to serve liquor will now be paying service tax with an abatement of 70 per cent.  The effective burden will be 3 per cent of the bill only in this case.

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