Everything the customer paying is not a service tax to government. The Union Finance minister proposed to increase the service tax of goods to 14%.
Everything the customer paying is not a service tax to government
The customers who are paying an excess amount in some restaurants and hotels as ‘Service Charge’ passing it as service tax. The finance ministry on Tuesday clarified that, what ever the charge collected by certain restaurants and hotels is not service tax. The ministry said in a statement that, the hotels, restaurants and eateries besides charging for the food and beverages are also imposing service charges which are retained by them.
Its the customers illusion
Some customers are in illusion that these service charges which are being collected by the restaurant on behalf of the government as tax, it added. ” The ministery clarified that these service charges collected by hotels, eateries will be retained by them only which are not the service tax imposed by the government.”
In case of air-conditioned eateries and hotels, service tax is charged at the rate of 14 percent, some times when compared with the total bill amount it takes a major amount. The effective service tax rate in respect of services provided in relations to serving food, beverages by a restaurant eating joint or mess by having air conditioning or central air-heating can works upto 5.6% of the total amount charged.Besides AC restaurants and hotels, other services that have turned costlier because of the higher tax rate include phone tariffs, airlines, banking, insurance, advertising, architecture, construction, credit cards, event management and tour operators.
Finance Minister proposed to raise the service tax on goods
Arun Jaitley, the Union Finance Minister proposed to raise the service tax to 14% for a smooth traansition to the goods and services tax regime, which the government roll out from April 2016. Once implemented, GST will subsume service tax, excise and other state levies. Although rollout of GST has been delayed as states have reservations on certain issues, the government has been gradually calibrating tax rates towards the planned GST rates so that transition becomes smoother.
The customers who are paying an excess amount in some restaurants and hotels as ‘Service Charge’ passing it as service tax. The finance ministry on Tuesday clarified that, what ever the charge collected by certain restaurants and hotels is not service tax. The ministry said in a statement that, the hotels, restaurants and eateries besides charging for the food and beverages are also imposing service charges which are retained by them.
Its the customers illusion
Some customers are in illusion that these service charges which are being collected by the restaurant on behalf of the government as tax, it added. ” The ministery clarified that these service charges collected by hotels, eateries will be retained by them only which are not the service tax imposed by the government.”
In case of air-conditioned eateries and hotels, service tax is charged at the rate of 14 percent, some times when compared with the total bill amount it takes a major amount. The effective service tax rate in respect of services provided in relations to serving food, beverages by a restaurant eating joint or mess by having air conditioning or central air-heating can works upto 5.6% of the total amount charged.Besides AC restaurants and hotels, other services that have turned costlier because of the higher tax rate include phone tariffs, airlines, banking, insurance, advertising, architecture, construction, credit cards, event management and tour operators.
Finance Minister proposed to raise the service tax on goods
Arun Jaitley, the Union Finance Minister proposed to raise the service tax to 14% for a smooth traansition to the goods and services tax regime, which the government roll out from April 2016. Once implemented, GST will subsume service tax, excise and other state levies. Although rollout of GST has been delayed as states have reservations on certain issues, the government has been gradually calibrating tax rates towards the planned GST rates so that transition becomes smoother.
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