What is difference between service tax and Service Charges?
Mohan
(Audit Assisstant & Accounts Manager)
(489 Points)
Replied 23 June 2016
Vishal Goel
(Chartered Accountant)
(1688 Points)
Replied 28 June 2016
Service tax is the tax levied by the government for services rendered by the restaurant.
This is charged by the restaurant for the services rendered to you. Since the money goes to the restaurant, the establishments are free to charge what they like, as there are no guidelines provided by the tax authority. The charges can vary from 5% to 20% — it depends upon the restaurant.
On July 14, the government clarified that service charges collected by the restaurant and then retained by the restaurant are not imposed by the government. The only taxes imposed by the government are service tax and VAT (which differs state-wise).
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