Analysis of your “Restaurant Bill”

When after a supper in your favourite restaurant, you receive a bill, it has a number of components enlisted with a value in front of each of them. Except the delicacies that we order, a few other charges and taxes are being levied . Let us look at each of them and take a step towards becoming an aware and smart customer.

  • Service Charge:
    • It is corresponding to the tip that we usually offer to the service staff.
    • No guidelines are being provided with respect to this.
    • Generally, varies from 4 to 10% of the total bill.
    • Not imposed by the government but by the restaurant itself.
  • Service tax:
    • Imposed by the government.
    • Imposed on 40% of the subtotal of the bill. Subtotal means the gross value of foods and drinks along with the service charge(if imposed).
    • Applicable only in AC restaurants.
  • Cess:
    • Tax on tax is termed as cess.
    • It is a kind of tax for a particular purpose.
    • Currently, Swaccha Bharat Cess and Krishi Kalyan Cess(0.5% each) are being imposed on the service tax.
  • Value Added Tax:
    • applicable to value addition.
    • different rates are imposed on food and beverages.
    • varies from state to state.

Example:

  • The gross value of ordered items: Rs.1000.
  • Service Charge(say 4%): Rs.40
  • Subtotal: Rs. 1040
  • Service tax(+ Cess): Imposed on 40% of 1040 @ (14+ 0.5)%; effectively 5.6% of the subtotal(Rs.1040)= Rs.58.24.

So, while dining at your favorite restaurant next time around, do not forget to analyse the bill.

Be a smart customer.

Good day.

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