Applicability of service tax.

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 October 2012 About Service Tax.

Its happens at many restaurants. Let me explain.

You might observe that "service tax" is misused and charged to the customers like you and me.

Let me give 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 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. 49.40 extra.
Thanks in advance, Sir.

@VaibhavJ

@VaibhavJ (Expert)

31 October 2012 Hi,

You are correct.

Rgds//Vaibhav

CA Ayush Agarwal

CA Ayush Agarwal (Expert)

31 October 2012 No, On Hotel & Restaurent Services, Abatement @60% is Provided.
so on Whole Amount of rs. 1100*12.36%*40% is to be Charged.
Provided Condions Fulfilled to Charge Service Tax, (AC & Licence to serve Alchol)

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