New Delhi: Union finance ministry on Tuesday tried to clarify between service charge imposed by hotels and restaurants and service tax.“Some of the consumers have a misapprehension that these ‘service charges’ are being collected by the restaurant on behalf of the government as tax,” the finance ministry said.
Some restaurants, hotels and eateries besides charging for the food and beverages are also charging ‘service charges’ in their bills. “The proceeds of the ‘service charges’ are retained by the restaurants/hotels/eateries,” said the ministry. It said that ‘service charges’ are not ‘service tax’ imposed by the government.
“It is further clarified that effective service tax rate in respect of services provided in relation to serving of food or beverage by a restaurant, eating joint or mess having the facility of air-conditioning or central air-heating in any part of the establishment is 5.6 per cent of the total amount charged,” said the ministry.
