Whether vat is to be collected on service charge??

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vemireddy (Querist)
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06 June 2013 In hotel industry service charge is collecting which is not a statutory compilance. Whether vat is to be collected inclusive of service or excluding the service charge

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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06 June 2013 VAT is to be collected EXCLUSIVE of service tax since VAT is levied on the sale of goods only.

vemireddy

vemireddy (Querist)
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06 June 2013 My doubt is not about service tax, it is about service charge

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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06 June 2013 VAT is to be collected INCLUSIVE of 'service charges' levied in the sales bill.

vemireddy

vemireddy (Querist)
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06 June 2013 Thank u sir

vemireddy

vemireddy (Querist)
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06 June 2013 May I know under which section it is collected

Tushar Desai

Tushar Desai (Expert)
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06 June 2013 It is not specifically covered under a section. As Mr Warrier said above, "VAT is levied on the sale of goods".

In this particular case, SERVICE CHARGE (Not Service Tax) is charged by the Restaurant (of the Hotel) for various services provided to customers. It is just an extra charge up and above menu price. So, this charge is to be added up to the actual "Sale of Goods".

Tushar Desai

Tushar Desai (Expert)
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06 June 2013 nowadays, hotels have started collecting money this way. I had recently had a dispute at a famous hotel in Daman in a very similar situation. I tried to frame them but could not do it in legal way.

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