Vat / service tax on food & alchohol in bar

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Rahul Jain (Querist)
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15 June 2015 What VAT & service tax will be applicable on food & alcohol in a bar.

The restaurant doesn't have AC and is in Mumbai
Pls help..

And what will be the case if the restaurant has AC

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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15 June 2015 if the foods are served in Non-AC
no service tax is applicable

but if it is served in AC

Rate is as follows

for Service Tax:

Service Tax Rate (from 1st June) 14%

Proportion on which service tax is levied 40%

Net Effective Rate 5.6%

VAT rate is state wise so pls refer your state act for the rate, however it is payable on the whole amount (in some states it is 14.5%)

For Eg

Food Bill Rs.1000
Service Charge Rs.100

VAT (14.5%) Rs.159.50

Service Tax Rs.61.60

Rahul Jain

Rahul Jain (Querist)
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15 June 2015 It is located in Maharashtra..
And it doesnt have AC, but serves alcohol

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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15 June 2015 Non Air Condition Restaurant, whether serving liquor or not are exempted

only thing is if it is AC then ST is applicable

however if there is more than one restaurant, but if they are clearly demarcated and separately named but food is sourced from a common kitchen, only the service provided in the specified restaurant is liable to service tax and service provided in a non air-conditioned or non centrally air- heated restaurant will not be liable to service tax. In such cases, service provided in the non air-conditioned / non-centrally air-heated restaurant will be treated as exempted service.

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Rahul Jain

Rahul Jain (Querist)
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15 June 2015 And Anybody have idea about VAT on alchohol/ food in bar in Maharastra

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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03 August 2025 Sure! Here’s a quick overview about VAT on alcohol and food in bars in Maharashtra:
1. VAT on Alcohol in Maharashtra
Alcohol (liquor) is subject to a special VAT rate — not the regular VAT rate for goods.
Maharashtra levies high VAT rates on liquor, typically around 36% to 40% or even higher depending on type of alcohol (country liquor, Indian Made Foreign Liquor (IMFL), beer, wine, etc.).
The VAT on alcohol is collected from the manufacturer or distributor, and bars/restaurants pay the price including VAT when they buy from licensed suppliers.
Bars are not required to separately charge VAT on the bill to customers for liquor, as liquor sale is regulated under the Maharashtra Prohibition Act and liquor tax laws.
Selling liquor without a proper license is illegal.
2. VAT on Food Served in Bars
Food sold in bars (like snacks, meals, etc.) is subject to regular VAT rates.
Maharashtra’s VAT on food items generally varies:
Basic food items often have low or zero VAT.
Packaged or processed food may attract 12.5% VAT.
Some specific food items or cooked food might have different rates depending on classification.
If the bar also runs a restaurant or provides catering, VAT applies to food and non-alcoholic beverages.
3. Summary
Item VAT Applicability in Maharashtra
Alcohol (liquor) High VAT rates (approx. 36%-40%) charged at manufacturer/distributor level; bars pay purchase price including VAT. Bars don't separately charge VAT on alcohol to customers.
Food (in bars) Regular VAT rates (typically 5%-12.5%) depending on food type.
4. Additional Notes
Bars must have proper licenses for liquor sales.
VAT rules for alcohol are strictly regulated; no separate VAT invoice is issued by bars to customers for liquor.
For food, bars need to maintain proper VAT invoices and file VAT returns accordingly.

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