Press Information Bureau
Government of India
Ministry of Finance
14-July-2015 15:31 IST

Service Charges Collected by Restaurants/Hotels/Eateries Retained by the Restaurants/Hotels/Eateries and are Not ‘Service Tax’ Imposed by the Government

Some restaurants/hotels/eateries besides charging for the food and beverages are also charging ‘service charges’ in their bills. The proceeds of the ‘service charges’ are retained by the restaurants/hotels/eateries.

Some of the consumers have a misapprehension that these ‘service charges’ are being collected by the restaurant on behalf of the Government as tax.

It is clarified that these ‘service charges’ collected by the restaurants/hotels/eateries are retained by the restaurants/hotels/eateries and are not ‘service tax’ imposed by the Government.

It is further clarified that 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 in any part of the establishment is 5.6% (14% of 40%) of the total amount charged.

Related Posts Selected by Editor

Service tax on Restaurants & Hotels, States alone can impose Tax-Kerala HC

Service Tax on Hotels & Restaurants Constitutionally Valid – Chhattisgarh HC

Parliament can impose Service Tax on Restaurants & Hotels – Bombay HC

VAT not leviable on Service Tax portion of Restaurant bill

Service Tax Rates chart applicable from 01/06/2015

More Under Service Tax

Posted Under

Category : Service Tax (3393)
Type : News (13801)
Tags : CBEC (400)

0 responses to “Service Charges Collected by Restaurants/Hotels is not Service Tax”

  1. Pillalamarri Shekar says:

    Is the service tax leviable on registered chits installments from June 2015.

  2. sheelu says:

    please correct it as 40% of 14%

  3. Adi says:

    Is the Service Tax leviable on only the 40% of the bill amount or 40% of Bill amt+Service Charges??

Leave a Reply

Your email address will not be published. Required fields are marked *