VAT on STamount regarding hotel bills
gudipati nagaraju
(Querist) 21 April 2014
This query is : Resolved
Dear sir or madam
Can hotel people charge vat on service tax portion of the bill
Please let me know which one of the below is correct as per law
Food bill=400 400
ST @4.944 =19.77 19.77
VAT @14.5 =58 60.86
Total= 477 480.63
Please clarify this doubt , here it is 3 rupees difference but when we club it may extende upto rs.3000
Thanks
malipeddi jaggarao
(Expert) 22 April 2014
VAT should on the basic food bill before loading the Service Tax.
gudipati nagaraju
(Querist) 22 April 2014
Sir
When i went to ask the same the hotel, the manager told that the supreme court judgment is to collect vat on service tax portion of the bill also ,
malipeddi jaggarao
(Expert) 22 April 2014
SERVICE TAX : The important thing, you should be aware about is how service tax is calculated! . Do you know that, Service tax is only applicable on 40% of the bill amount, not the total amount. As the service tax is around 12.36% at the moment, the final tax you need to pay is only 4.944% (12.5% X 40%) on the bill (inclusive of service charge).
The next important thing you should know is that, only AC restaurant can charge service tax. If there is no AC in restaurant (fully or partially) , they cant charge service tax at all. This service tax goes to Govt of India. The service tax is payable on the bill amount + service charge. So if Bill amount is Rs 1,000 , and service charge was Rs 100 (10%), then your sub total would be Rs 1,100 . And your service tax will be computed on Rs 1,100 (not Rs 1,000). 4.944% of Rs 1,100 will be Rs 54.38 and your total bill after service tax would be Rs 1154.38 . A lot of unprofessional and small restaurants are found to charge service tax on the full bill and most of the customer pay because they have no idea what is wrong and what is right.
VAT is Value added Tax collected by State Govt. VAT is only applicable to the food items which are prepared inside the restaurant, because they “added some value” and then hand it over to you. So make sure you do not pay it on packaged items which are not prepared by Restaurant like Packaged food items, water bottles etc. A lot of times you eat at restaurant and also take a lot of packaged items, in which case VAT should be applicable not on final bill, but only sub total of the food items you consumed.
P. Venu
(Expert) 22 April 2014
Highly enlightening opinion. However, generally, restaurants/hotels do not show service charges separately.
gudipati nagaraju
(Querist) 22 April 2014
Thank you very much sir ,
but the hotel person is showing one article in one telugu news paper , the article is like this
The VAT on service tax portion is correct as per the supreme court judgement (as in your case it is on Rs.1100)
Sir if you can read telugu i will attache the same in next message ,
The main objective of mine is to tell them to rectify the process of billing and to let others know about this if it is wrong
so please clarify the same
R K JAIN
(Expert) 23 April 2014
As per latest judgement of Kerala High Court there should not be service tax on sale of food in restaurant but there should be only VAT.
T. Kalaiselvan, Advocate
(Expert) 23 April 2014
Mr. Malipeddi Jagga Rao's excellent explanation have enlightened many information regarding the service tax and vat. I thank him for providing the information on behalf of all those who are not aware of the same and also on my own behalf too.
