<div>The government has clarified that "service charge" collected by certain restaurants and hotels is not "service tax", which is levied at a rate of 5.6 per cent on the total bill.</div><div> </div><div>In a statement, the Finance Ministry said some hotels, restaurants and eateries, besides charging for the food and beverages, are also levying "service charges" in their bills which are retained by them.</div><div> </div><div>Some of the consumers have a misapprehension that these "service charges" are being collected by the restaurant on behalf of the government as tax, it added.</div><div> </div><div>"It is clarified that these 'service charges' collected by the restaurants/hotels/eateries are retained by the restaurants/hotels/eateries and are not 'service tax' imposed by the government," the Ministry said.</div><div> </div><div>In case of air-conditioned eateries and hotels, the service tax at the rate of 14 per cent is charged only on 40 per cent of the bill amount.</div><div> </div><div>The effective service tax rate in respect of services provided in relation to serving of food or beverage by a restaurant, eating joint or mess having the facility of air-conditioning or central air-heating in any part of the establishment is 5.6 per cent of the total amount charged.</div><div> </div><div>The government had increased the service tax rate to 14 per cent from 12.36 per cent (including education cess) from June 1.</div>
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