Be cautioned before you pay your restaurant bill

Be cautioned before you pay your restaurant bill

Pay service tax of only 14.5 per cent on 40 percent of your total hotel bill.

Service tax is the tax levied by the government on services rendered by restaurants. Service tax is the same in all states. The service tax rate at present is 14.5 per cent (inclusive of Swachh Bharat cess). The restaurant must be air-conditioned for the service tax. Also, customers must know that they cannot be taxed on the full bill, but only on 40 per cent of the bill as directed. Whenever you see service tax on the

total bill exceeding about five per cent, you can question it. Service tax actually works out to only 5.6 per cent of the total bill, that is, 14 per cent of the 40 per cent. If the restaurant is indeed charging service tax at 14 per cent on the entire amount, rather than 5.6 per cent, the amount collected from customers should be paid to the government.

And restaurants are not supposed to charge VAT on packaged food or drinks, like bottled water. VAT should be charged only on food prepared by the restaurant. Products like bottled water are sold at the MRP. There is no additional VAT, since it is included in the MRP.

What you can do?

If you find a restaurant is overcharging, that is, charging 14 per cent service tax on the entire amount, you can bring it to the notice of authorities in the tax department.

If a restaurant is charging service tax on the full 100 per cent of the bill but paying tax only on 40 per cent, it can be prosecuted.