Here is a treat to all the foodies. Now, you will be getting relaxation for dining in a Non-AC and AC Restaurant. The Financial Ministry has clarified that Service tax will not be levied on customers dining in restaurants without air conditioning facility or central heating.

For the restaurants that have ACs or central heating will be imposing service tax only on 40% of the total bill amount. that means One have to give  “60% 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%”.

Points to Remember:

1. Service Tax:

• Before 2013, There were 2 condition that can lead to levy of Service Tax
  1.  The Restaurant should be AC
  2. The restaurant should be serving Liquor
• The 2nd Condition was removed by P. Chidambaram in 2013.
• After that, the service tax shall be levied by all the Ac Restaurant.
• When you go in a restaurant, you also pay charges for the amenities the restaurant provide to you i.e Service Charge.
• With effect from, 1st June, the Service tax has been increased fro 12% to 14%
• So, As per the latest amendment- Abatement has been allowed on the food served i.e the Service tax shall be charged on the 40% of the food bill

1. If you are dining in AC Restaurant, Following charges shall be applicable: 
   1.  From now, the service tax shall be charged on the 40% of the bill
   2. The effective service tax rate shall be 5.6%.
   3. Abutment of 60% of the amount of food bill shall be allowed.
2. Example:
   •  The total food bill                            2000
   • Service Charge:                                   200
   • Total                                                    2200
   • [email protected]                                            319
   • Total amount before service tax    2519
   • Service Tax @14%
   • Proportion on which service tax is charged will be 40% of the bill.
   • Net effective rate of Service Tax is 5.6%
   • Amount on which service tax is paid (2000+200)
   • Total amount of Service tax 5.6% of 2200- 123
   • Total amount paid by a customer (2519+123)-2642
3. If you are dining in a non-Ac Restaurant: Not Applicable
4. Some Related Question:
   1.  Service Tax is levied by whom?(Central Government)
   2. Who introduced in Service Tax? (Dr. Raja Chelliah Committee)
   3. What was the initial rate of Service Tax? (5%)
   4. What is the current rate of Service Tax?(14%)