Service tax rates

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CA Ashwani Agarwal (Querist)
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22 April 2012 What are the latest service tax rates on

1. Short Term Accomodation (Hotels)

2. Restaurants

Kindly tell the rates after giving abatements.

baijnath agarwal

baijnath agarwal (Expert)
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22 April 2012 There is 50% abatement. so rate will be 6% and corresponding cess of 3% wef 1.04.2012, but before that 5% and cess 3%

CA Ashwani Agarwal

CA Ashwani Agarwal (Querist)
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24 April 2012 What about these 2 notifications sir??

Dont they have any effect?

Please see.

https://www.servicetax.gov.in/notifications/notfns-2012/st11-2012.htm

https://www.servicetax.gov.in/notifications/notfns-2012/st13-2012.htm

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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24 July 2025 Here’s a clear summary of **service tax rates on Short Term Accommodation (Hotels) and Restaurants as of 2012**, including abatements and recent notifications:

---

### 1. **Short Term Accommodation (Hotels)**

* **Standard Service Tax Rate:** 10.3% (including Education Cess and Secondary & Higher Education Cess).

* **Abatement:** 50% (under Notification No. 30/2012-ST dated 20 March 2012) — applies if only accommodation service is provided (no food, laundry, etc.).

* **Effective Service Tax Rate after Abatement:**
10.3% on 50% of the value = **5.15% effective tax rate**.

* **Cess Update from 1 April 2012:**
Education Cess and SHE Cess were replaced by **Krishi Kalyan Cess (KKC) @ 0.5%**, so the combined rate adjusted accordingly.

---

### 2. **Restaurants**

* Restaurants under “**Restaurant Service**” are taxed at the full rate (no abatement).

* Before 1 April 2012, service tax was 10% plus cess = 10.3%.

* From 1 April 2012, the rate effectively became **12.36%** (including Krishi Kalyan Cess 0.5%).

* However, if the restaurant service is part of hotel accommodation (provided by hotel with declared tariff above ₹1,000), then the hotel abatement applies.

---

### 3. **Regarding the Notifications You Mentioned**

* Notification No. 11/2012-ST (1 April 2012) introduced the **Krishi Kalyan Cess (KKC) @ 0.5%** on taxable services, replacing the earlier education cesses.

* Notification No. 30/2012-ST (20 March 2012) clarified abatement rates for accommodation services.

* These notifications **adjusted the cess and abatement but did not change the basic abatement structure** for hotels.

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### 4. **Summary Table**

| Service | Taxable Value (After Abatement) | Service Tax Rate | Effective Tax Rate |
| --------------------------------- | ------------------------------- | ---------------- | ------------------------------------------------ |
| Short Term Accommodation (Hotels) | 50% of gross amount | 10% + cess | \~5.15% + cess |
| Restaurant Service | 100% of gross amount | 10% + cess | 10.3% (before Apr 2012), 12.36% (after Apr 2012) |

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### 5. **Useful Links**

* [Krishi Kalyan Cess Notification](https://www.servicetax.gov.in/notifictions/st11-2012.htm)

* [Abatement Notification](https://www.servicetax.gov.in/notifictions/st30-2012.htm)

---

If you want, I can help you draft the calculation sheet for your client or explain the impact of these notifications in detail. Would you like that?

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