About Service Tax..... how restaurants loot your money ... Beware
This happens at many restaurants. Let me explain.
You might observe that "service tax" is misused 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 above 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, start asking them questions – you’ll be 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”. Or “Sir, you do not need to pay the Service Tax amount itself”.
Every bill must carry the TIN number and Service Tax Number, if they charge it. So, ask for the Service Tax number if it is not available in the receipt that they provide.
This happens at many restaurants. Let me explain.
You might observe that "service tax" is misused 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 above 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, start asking them questions – you’ll be 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”. Or “Sir, you do not need to pay the Service Tax amount itself”.
Every bill must carry the TIN number and Service Tax Number, if they charge it. So, ask for the Service Tax number if it is not available in the receipt that they provide.