Applicability of service tax on restaurants

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Querist : Anonymous

Querist : Anonymous (Querist)

03 December 2012 Is service tax applicable on restaurant.If yes then at what rate.

Amol S Joglekar

Amol S Joglekar (Expert)
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03 December 2012 restaurants selling eatable are not covered under service tax.

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Querist : Anonymous

Querist : Anonymous (Querist)

03 December 2012 Actually Sir i have read the notification given below & then the doubt arised.

kindly pls confirm whether still service tax on restaurants is applicable or not.

FH/1/2012
March 30, 2012

The Managing Director/CEO/Director/Partner/General Manager
All FHRAI Members

CC: All Members of the Executive Committee
All Regional Associations

President FHRAI

Sub: Clarification on Applicability of Service Tax w.e.f. 1st April, 2012

Dear Sir/Madam,

Greetings from FHRAI!!

This is further to our email of 29th March, 2012 on the above captioned subject.

As members are aware, in the Finance Bill 2012-13, the rate of Service Tax has been increased from 10% to 12%. The net rate of Service Tax would be 12.36% i.e. 12% Service Tax +3% Cess (2% Education Cess and 1% Higher Education Cess) and would be effective from 1st April, 2012.

Abatement:

The abatement available for hotels (room) is 50% and Restaurants (A/c Restaurant having licence to serve the liquor) 70%. It means the hotels having room Tariff of Rs. 1000/- and above has to pay the Service Tax on 50% of Room Tariff @ 12.36% (the net rate of Service Tax comes to 6.18%).This would come into force from 1st April, 2012.

For A/c restaurants (having Licence to Service the Liquor) the Service Tax is applicable on 30% of the Bill @ 12.36% (the net rate of Service Tax comes to 3.708%). This would come into force from 1st April, 2012.

Members may please recall that Hotels/Restaurants/clubs are covered under Mandap Keepers for holding social functions such as marriage, conferences and seminars where substantial food is served. It attracts the Service Tax @ 12.36%. There is abatement of 40%. It means the Service Tax is applicable on the 60% of the total bill or the net rate of Service Tax comes to 7.416%. This would come into force from 1st April, 2012.

Please note that the abatement for hotels/restaurants/Mandap Keepers has been proposed to reduce in the Union Budget 2012-13, as per details given below:

Service Description Applicable w.e.f.
1st April 2012 Proposed abatement (reduced) in the Union Budget 2012-13 (would not be effective till the Finance Bill 2012 is passed)
Present Abatement Service Tax @12.36% Proposed Abatement Service Tax @12.36%
Hotels -Room Rent (Having tariff of Rs. 1000/- and above) 50% 6.18% 40% 7.416%
A/c Restaurants( Having Licence to serve the liquor) 70% 3.708% 60% 4.944%
Mandap Keeper 40% 7.416% 30% 8.65%

This is for your information please.

With best wishes,

Yours sincerely,

M D Kapoor
Secretary General
________________________________________________
The Federation of Hotel & Restaurant Associations of India
Regd.Office: B-82, 8th Floor, 23 K.G. Marg, New Delhi - 110001
Tel: 011-40780780 Fax: 40780777
Email: fhrai@vsnl.com Website: www.fhrai.com