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Service tax on meal plan (included in room tarriff)

Dinesh (Manager-Finance) (30 Points)

13 January 2015

Hi,

We are running hotels in various locations. We charge or Room tariff including Meals e.g. Breakfast/Lunch/Dinner. We quote our customers Room rate Rs.4000/- CP + Tax (CP means Continental Plan which included Room Tariff & Breakfast). We split this room rate like 3800 Room rate (Accomodation Service) & 200 for Breakfast (Food) where we charge Service tax 7.42% on Rs.3800/- & 4.944 % on Rs.200/-.

Service tax department has raised querry on this tax structure stating this is bundle of Service & hotel should charge 7.42% service tax on Complementary Breakfast. Please advise.

Thanks

Dinesh Kargutkar

9987660543

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6 Replies

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 13 January 2015

IF THERE IS NO BIFURCATION OF ROOM RENT AND MEAL THEN IT WILL COME UNDER SECTION 66F OF FINANCE ACT I.E. IT WILL BE TREATED AS BUNDLED SERVICE.

As you said that your hotel is charging including meal charges, it means there is no bifurcation of room rent and meal hence it will cover under section 66F (bundled service).

As per Section 66F, highest rate will be charged i.e. 60% of 12.36% (7.42%).

Regards.

Siddharth Bumb

www.siddharthbumb.blogspot.com

www.facebook.com/DTandIDT

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Dinesh (Manager-Finance) (30 Points)
Replied 13 January 2015

Hi Sir,

On our hotel bill we are bifurcating as 3800 Room Tariff & 200 Meal Plan.

Most of the hotels in India are following the same structure.

Dinesh

sudarshan (CA) (745 Points)
Replied 14 January 2015

it is not clear when Rs.200 is charged in bill, how can it be called complementary breakfast.

Dinesh (Manager-Finance) (30 Points)
Replied 14 January 2015

Sir, we are bifurcating for our internal revenue breakup. 3800/- will be shown under Room Revenue (Accomodation Service) & 200/- will be shown under Food & Beverage revenue (Restaurant Service). For customer we charge 4000/-.

Actual query is when we bifurcate our revenue into to Revenue Heads what will be applicability of service tax. Will it be treated as Bundled Service or Both seperate catogories of services because there are various abatements applicable in Hotel Indusrty on different catogories of services.

Regards

Dinesh

@*CS Siddharth Bumb. * (B.Com, CA Final, CS ) (5270 Points)
Replied 14 January 2015

Sir,

Your internal bifurcation is not important, what is important is , how you are collecting from customers is important. You are collecting entire 4000 then service tax will be on 4000 as bundled service.

If you issue invoice as breakup of room rent and meal then different rate will apply.