If you've had a meal at a restaurant recently, then please double check your receipt to make sure that you've not been cheated!
Most of the restaurants and hotels have been charging customers excessively by billing them a ‘service charge’, in addition to a service tax.
They then try to convince the customer that it is part of the tax that goes to the government.
Though the government have clearly mentions that 'Service Charge' is nothing to do with 'Service Tax'. And even a single amount does not go into government coffers.
What is service charge??
It's a variable component of the invoice, and falls between 5 per cent and 12 per cent.
service charge is levied by restaurant owners as payment for services rendered, including serving food, and is distributed among kitchen staff. Any Restaurant have to compulsory mention the percentage of service charge in their Menu. And if they don't, you as a citizen have a complete right to stand against them.
Then what is Service tax?
Service tax: This is a component that goes to the Central Government, who imposes a levy on the services you enjoy. Earlier, it covered restaurants that were air-conditioned, and served alcohol, but now applies to all eating joints. In the last budget, service tax was increased from 12.36 per cent to 14 per cent.
And it has to be charged only on the 40% of the total bill.
The effective service tax rate, therefore works out to a mere 5.6 percent of the total amount charged. But most of the restaurant are swindling you (customers) by charging 14 percent to your entire bill.
So, whenever you see restaurants charging service tax more than 5.6%, you have a complete right to ask for an explanation.
And do know the difference between 'Service charge' and 'Service Tax' .