Be it your Marriage Anniversary or your Birthday or just another day We love going to Restaurants. But have you ever checked the Restaurant Bills? At the end of the bill we see several headers like Service Charge, VAT, Service Tax, Tax1 and many headers I fail to comprehend.
A few days back Central & Central Excise Department, responsible for Service Tax issued advertisements in leading dailies about What each of these headers mean and How some Restaurants are cheating in the name of Government Taxes.
Service Charge: This is charged by Restaurant up and above the food cost. This is what is equivalent to tip. Government has no role to play in this. This can vary from 5% to 20% and some bills might not even have this.
VAT: This is Government Tax and varies from state to state and item to item. It can be as high as 12.5%
Service Tax: This is tax component which is levied by the Government. This is 12.36% of 40% of your food bill and Service Charge, i.e. 4.94% of your food bill and Service Charge.
Point to Note: Service Charge is different from Service tax
Below is the advertisement I was talking about…