About Service Tax..... how the restaurants loot our money ...
"service tax" has been mis-used and charged to the customers like you and me.
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 said 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.
Response from some big restaurants is more concerning. 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.
Every bill must carry the TIN number and Service Tax Number, if they charge it. So, why not service Tax as well if it is not available in the receipt that they provide.
This is clearly fleecing the customers and we must fight it back. First step can be posting as many bills like this on the local circle. more
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 said 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.
Response from some big restaurants is more concerning. 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.
Every bill must carry the TIN number and Service Tax Number, if they charge it. So, why not service Tax as well if it is not available in the receipt that they provide.
This is clearly fleecing the customers and we must fight it back. First step can be posting as many bills like this on the local circle. more
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View all 6 comments Below 6 comments
Service tax is charged for 40% of the F&B bill. Effectively 5.6% of the F&B Bill. Service charge is over and above the F&B Bill is an additional charge the owner bills as gratuity. Thus one can decide to tip or not in case the Service Charge is already included, since this is distributed amongst the staff. more
Jul 16
As far as i know the service tax is charged on the 40 percent of the total food bill if the restaurant is air conditioned and this is as per the norms laid by finance ministry. In a way we should be fine with the same. Now if the service tax is applicable on 40 percent of the bill then the VAT should be applicable on the remaining 60 percent and not on the full bill. Government should come up with clarification on the VAT part. The other problem is with the service charges, which i believe is unreasonable. i think the customer can give the Tips only if he or she is happy with the service. more
Jul 15
I'm not too sure but I've also heard that they're supposed to give part of the service charges to the waiters as they're the ones who provide the service. But waiters claim they never get this and the customer then feels obliged to pay an extra tip as well. In addition when you question a restaurant owner you're made to feel as if you're the one who is at fault and is being petty. Great that you brought up the issue. more
Sep 14
we must use all possible forums and ensure that govt takes remedial action to address such open frauds. I suggest we must post copies of such bills on local circle and force to govt to take action against such restaurants more
Sep 14
