No service tax can be levied on Non-Air conditioned restaurants

Service tax will not be levied on customers dining in restaurants without air conditioning facility or central heating, the finance ministry has clarified.

Even the restaurants that have ACs or central heating will levy service tax only on 40% of the total bill amount, the ministry said in a statement. In case of air-conditioned or air-heated restaurants, “60% of the value is to be deducted from the total amount charged while applying the rate of service tax and tax is to ..

The earlier service tax rate was 12.36% including the education cess. The effective service tax on eating out in air-conditioned or centrally-heated restaurants will be 5.6% of the food bill compared with 4.94%.

The customers must see the bill and ask for valid ST amount. There are many cases we ignore the % of service tax and pay the bill. Even if it is AC restaurants they cannot charge 14% as service tax. They have to charge only 5.6% on total bill.