Notification: Service tax only in AC restaurants, Effective rate 5.6%

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Service tax is a tax which is payable on services provided by service provider. It is like Excise duty. Excise duty is payable on the goods which are manufactured. As same as service tax is payable on services. Service tax is taken by the government. The service provider collects tax from the customer and deposit to the government.

Service tax only in AC restaurants:

Service tax is only payable on AC restaurants. The restaurants without air conditioning facility will not charge any service tax from their customers, said by Financial Ministry.

If the Restaurant has the facility of AC or central heating, will charge only on the 40% of the total bill amount.

Read also: Revised Service Tax Rates

Restaurants or messes, which do not have the facility of AC or Central heating are exempt from service tax.

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“In other words, we can say that only air-conditioned or Central-heated restaurants are required to pay Service Tax,” the ministry said in a clarification on applicability of the levy. With the increase in the rate of Service Tax to 14% from June 1, the effective rate of tax will be 5.6% of the total amount charged.

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The service tax is applicable from 1994 by the Financial minister. When we use the services like phone bill payment or hire a room in a hotel, we have to pay out little more than the actual rate. This is because of service tax.

Also Read: GST Tax Rate in India: Final GST Rate Out

In budget 2015, the financial minister declared that the service tax has been increased from 12.36% to 14%%. And this new rate of service tax is applicable from 1st June 2015. Before 1st June, the tax of provided service was 12.36% and after 1st June 2015 it is 14%.

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