FEEDBACK – CA – NOV 14
- Posted by CERC India
- Posted in Uncategorized
I have been reading your publications regularly for many years. I wonder whether you can give me the correct picture on service charges levied by restaurants. They charge service tax on the entire bill without showing service charge separately. They bill according to the prices given in their menu. This is exploitation of customers as service tax is to be charged on service charge only. Isnâ€™t it?
– Madhusudan Khandwala, Ahmedabad
CERCâ€™s response: You are right. Good restaurants do show service charge separately. The restaurant bill has four components â€“ price of food as per menu, service charge, service tax and VAT. Service tax (in all states) is 12.36% of 40% of the bill. Hence, it is wrong to compute service tax component on the full value of the bill.
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