16/03/2015
Have you ever analyzed your restaurant bill ?
I am sure you dont have idea, how much extra have you paid so far ?
A bill will have four components :
1. The items you ordered
2. Service Charge
3. Service Tax
4. Value added Tax (VAT)
The items you can order include food,drinks and/or packaged items like packaged drinking water, a bag of chips, a cigarette pack, etc. On this you are levied service charge, service tax and VAT.
Service Charge
This is for the services rendered to you.There are no explicit guidelines regarding service charge. This depends solely on the restaurant management. Typically,it is between 4% to 10%. This basically goes to the restaurant and should be,supposedly, distributed among the staff. Hence, the restaurants have converted service charge into a "mandatory tip"
Catch: Unless this is communicated to you-displayed on menu,displayed on wall posters or displayed on any other pamphlet (Barbeque Nation tells you beforehand) you can question your bill. If this is included, you can also avoid giving tips. Also, this is supposed to be charged for the services they offer. Except food and liquor you ore not obligated to pay the service charge for other items.
Service Tax
Service tax is the tax levied by the Government on the services rendered by restaurants. It is 12.36% on the 40% of the bill. The bill includes your food and drink and the service charge ( service tax should be 40% * 12.36% = 4.94% on the total bill)
Catch : Service tax can only be charged if the restaurant is Air Conditioned.
Value Added Tax
This tax is state specific and it varies form 5% to 20%. This is charged on goods or services upon which there is some value addition.
Catch: Food prepared in restaurant kitchen.Make sure that you are not charged VAT on packaged food items or water bottles. The VAT rate is also different for alcoholic beverages and other food items. It is better if you take two separate bills for food and drinks.Restaurants have to charge service tax only on 40 per cent of the total food bill because 40 per cent is for the services provided and 60 per cent is treated as goods sold. As per this logic, VAT should be payable only on 60 per cent of the bill because service tax is already charged on 40 per cent of the food bill, but this is not the case as the VAT rules expressly state that VAT needs to be applied on the total food bill.
