Wednesday, July 15, 2015

Finance ministry note's clarifies service charges and taxes in Indian restaurant bills

Finally, the Finance Ministry has come up with a clarification that the service charges levied on the Indian restaurant customers are not taxes collected by the government. The service charges are retained with the restaurant owners. 

The exact Finance Ministry notes 

"Some restaurants/hotels/eateries besides charging for the food and beverages are also charging 'service charges' in their bills. The proceeds of the 'service charges' are retained by the restaurants/hotels/eateries,"

What exactly is the service charge?
  • The actual service charge is 14% on 40% of the total bill - this applies when the restaurants does not include service charges in food bills separately. 
  • 14% on 40% of the total bill - 5.6% of the total bill.
  • The service charge applies to restaurants restaurant having air-conditioning or central heating.

Some restaurants does not include service charges in the food bill and they charge it separately. Off late, there has been a numerous complaints with regarding to the inflated bills in some restaurants as the final bills zooms northwards.
I think such restaurants should report that the cost of the food does not include service charges in their menus to avoid confusion.   

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