Food is a big part of one’s life. It is not just limited to being a basic necessity but a way to celebrate love and enjoy life with loved ones. Expecting treats from friends on being committed to being dumped is a wonderful excuse to visit your nearby restaurant. With the growth in urbanisation, young talents migrating to cities in search of jobs, no one has enough time to cook food at home; with this the restaurant industry in India is blooming. But with the delicious restaurant meals comes the high rising restaurant bills too. Sometimes the tax levied on the food bill for one meal seems more than the whole week’s grocery bill.
In your hurry you neglect checking the food bill amount and the taxes applied on it. Then eventually all your monthly salary goes towards your food bill. Your restaurant bill pile manages to scare you more than your weekend’s horror movie. It is evident for you to know where your hard earned money is going. You need to have a knowledge of the taxes levied on your food and beverage bill. Main component of a restaurant bill are food and beverage amount, service charge, VAT (Value Added Tax) and service tax. Service tax include Krishi Kalyan Cess and Swachh Bharat Cess too.
Service Charge: This is a charge imposed by the restaurant owners for the service rendered by them like serving the food etc.. This is not collected by the Government and goes into the owner’s pocket only. It is basically a fixed and mandatory tip amount to be paid. The amount of service charge totally depends on the restaurant management. It generally varies from 5% to 10% of the food bill. Some restaurants charge only the dine-in customers and not for the Take-Away or home delivery options. If you are charged with service charge you are not liable to give additional tips in restaurants.
VAT (Value Added Tax): It is a state specific tax. This amount is at the sole discretion of the state government. Different states apply different rates of VAT. This tax can be different for different food items. Generally the VAT applied is different for food items and alcoholic beverages. Some restaurants apply a flat amount of VAT on the complete food and beverage bill. In such case you should ask for separate bills. This tax can be as low as 5% to as high as 20% depending on the state government laws.
Service Tax: This tax is levied by the Central Government on the services rendered by the restaurant. This tax is same all throughout the country.When you go to a restaurant you not only eat their food but also take advantage of certain amenities and hospitality services. Service tax is not applicable on the home delivery food orders. Not all restaurants are qualified to charge service tax. Only the restaurants serving food or beverage, which have air-conditioning or central air-heating facility in any part of the establishment, are liable to collect service tax from customers. It is not necessary that the area where the food or beverage is served should be air-conditioned, but even if any part of the restaurant is air-conditioned, the restaurant owner is permitted to the charge service tax to its customers. The service tax is charged on 40% of the food and beverage bill at the rate of 14%. Also Krishi Kalyan Cess and Swachh Bharat Cess is charged on the rate of 0.5% each. The complete service tax comes out to be 6% of the total bill amount.
So from now on whenever you are presented with the bill after a meal you are smart enough to comprehend whether you are being cheated or charged justly.