This is my first thread under Financial Management category.
I am not a finance professional, but thought of sharing this as received.
Ramanathan Hariharan updated his status: "Surprisingly after reading about the "Service Tax", I strongly decided to share this information to everyone.
This happened at the restaurant. Let me explain.
We had been to several restaurants recently. I observed that "service tax" has been mis-used and charged to the customers like you and me.
Let me give an example.
Food and Beverage = Rs. 1000.00
Service Charges @ 10% = Rs. 100.00 (10% on the Food and beverage amount)
Service Tax @ 4.94% = Rs. 54.34 (4.94% on F&B + Service Charges)
VAT @14.5% = Rs. 145.00
Total = Rs. 1299.34
As per the definition - "Service Tax can be charged only for the services provided to the customer".
Now, see what ! is happening here in the abovesaid example.
Service Tax should be charged only on the Service Charges amount i.e Rs.100 and not on the entire amount (1000+100).
In this example, the customer should be charged only Rs 4.94, whereas he has been charged
Rs. 49.00 extra.
Where does this money go? Only the restaurant owner and the chartered accountants who work for them know.
So I have started asking them the questions - and surprised to see the reactions from the famous restaurants. Either they say: Sir we cannot change the format of the bill - so, we will recalculate and tell you the revised amount. You may pay only that.
Sir, you do not need to pay the Service Tax amount itself.
I now have 3 to 4 restaurant bills, for which I have paid only the service tax - on the service charges and not on the total amount.
Every bill must carry the TIN number and Service Tax Number, if they charge it. So, I ask for the Service tax number if it is not available in the receipt that they provide.
We cannot go to any government official and ask them to get this right - because of our system.
Please remember - we cannot change any political leader - but we can change ourselves. If we change ourselves - things will change.
Please do share this with every one of your friends and knownpeople.
Ask for the right tax calculation and pay only the tax which is supposed to be paid. Verify every bills and receipts that you make payment on.
I have few similar experience as well.
I mean they charge service tax but they don't specify the service tax registration number (15 Digits) on the receipt/invoice/bill.So,In short they charge and that goes to their pocket.
But we need to be aware and careful.
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