Finance Ministry Clarifies Service Charge Collected by Hotels is Not Service Tax

Next time If you have a plan of a meal at restaurants , please make sure you are not being fooled with the taxes levied on the receipt/ tax invoice. The government alerts  If you are going to have a meal at a restaurant next time, double check your receipt to make sure that you are not cheated! According to the reports ,Many restaurants and hotels have been charging customers excessively by billing them a ‘service charge’, in addition to a service tax. They then try to convince the customer that Service  tax and Service charge are both related to the taxes that are imposed by the government to restaurant.

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The Union Finance Ministry  stated on Tuesday that ‘service charge’ has absolutely nothing to do with service tax, and it does not go into the government vaults. Instead, it ends up in the restaurant owner’s pocket.In many  air-conditioned restaurants and hotels, service tax is set at 14%, but only on 40 percent of the total bill amount. The effective service tax rate, therefore works out to a mere 5.6 percent of the total amount charged. Many restaurants are also swindling their customers by charging a 14% tax on the entire bill amount.

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Next time If you notice a restaurant cheating on you , please stand on them legally and make sure to report in customer courts . Don’t Compromise on your rights and speak for demanding a punishment for them. Also, don’t forget to take a share the photo of the overpriced bill on the social networking sites and spread the awareness.

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