No service tax in non AC restaurants

Restaurants without air conditioning facility will not charge any service tax from their customers while the ones with ACs will charge only on the 40 <g data-gr-id="12">per cent</g> of the total bill amount, the Finance Ministry said on Tuesday. Restaurants, <g data-gr-id="13">eating-joints</g> or messes, which do not have the facility of air-conditioning or <g data-gr-id="14">central-heating</g> in any part of the establishment are exempt from service tax. “In other words, only air-conditioned or <g data-gr-id="15">air-heated</g> restaurants are required to pay Service Tax,” the Ministry said in a clarification on applicability of the levy.

In case of air-conditioned or <g data-gr-id="16">air-heated</g> restaurants, “60 per cent of the value is to be deducted from the total amount charged while applying the rate of Service Tax and tax is to be calculated on the balance 40 per cent,” it added. With the increase in the rate of Service Tax to 14 <g data-gr-id="17">per cent</g> (subsuming the Education Cesses) from June 1, the effective rate of tax will be 5.6 <g data-gr-id="18">per cent</g> of the total amount charged.