Service Charge is not Service Tax – Finance Ministry

Beware logical Indians , don’t get cheated easily by restaurant owners in the name of service charge, in addition to service tax. It has been a common practice now that restaurants these days are charging its customers ‘ service charges’ which has absolutely nothing to do with “service tax”. The union finance ministry clarifies this and says it does not go into government treasury rather it generates additional revenue to restaurant owners’ income.

Many restaurants and hotels befools their customers by saying that it is a part of tax that goes into government revenue while this is completely untrue claims finance ministry. The ministry also clarifies that service tax is set at 14% but only on 40% of total bill amount that too in air conditioned restaurants and hotels. Also, The restaurants which are not air conditioned and do not have heating facility can’t charge service tax to its customers. Thus the effective service tax works out to be 5.6% of total amount charged. In addition to this malpractice, many restaurants and hotels are also swindling their customers by changing them an extra tax of 14% on entire bill amount.

So it is wiser to be aware and vigilant than to be ignorant and get cheated time and again. Now once you know this, fight for your right and don’t hesitate to demand a refund. Also, Remember to take a photo of the overpriced bill.

Let’s Talk


Sign up to our newsletter and stay updated on all latest law news.
We respect your privacy and hate spam as you do.