Govt questions services charges at eateries

 The government on Tuesday clarified that the service charge collected by certain hotels and restaurants was not the service tax levied by it, and that the restaurants were not sharing the proceeds of such charges with it.

The announcement comes from the government, keeping the convenience of consumers in mind.

“Some restaurants, hotels and eateries, besides charging for food and beverages, are also charging ‘service charges’ in their bills. The proceeds of the ‘service charges’ are retained by the restaurants/hotels/eateries,” the Finance Ministry said.

Some of the consumers have a misapprehension that these ‘service charges’ are being collected by the restaurant on behalf of the government as tax, it said, and clarified that these ‘service charges’ collected by the restaurants, hotels and eateries are not ‘service tax’ imposed by the government.

“These charges remain with the restaurants, hotels and eateries,” the ministry said.
It is clarified that effective service tax rate in respect of services provided in relation to serving of food or beverage by a restaurant, eating joint or mess, having the facility of air-conditioning or central heating in any part of the establishment is 14 per cent, which is only charged on 40 per cent of the total bill amount.