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.
- 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.
- 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.