Like Eating Out? Know your Food Tax | Business | Nelive

Like Eating Out? Know your Food Tax

Mar 19, 2015 20:14

When you eat out, does it surprise you that the bill you pay is always much more than what you’d mentally calculated according to the prices mentioned in the menu? That’s because you pay almost 30 per cent more in taxes. Team NELive simplifies it for you and shows you how to check if you’re being overcharged.

Most of you would have noticed the following charges when the check is presented to you:

1. Food. This is the price that mentioned in the menu.

2. Service charge. This is what is otherwise known as tip. This is not mandatory but most restaurants include 5-10 per cent in the bill. The service charge must be displayed in the menu for restaurants to charge it in the bill, else you do not have to pay it. But why kick up a fuss over it, unless the service was exceptionally bad? You’d have left a tip anyway. In restaurants where service charge is already included, don’t feel guilty about picking up all the change that is brought back.

3. Service tax. Applicable since April 2013, this is for the services provided in a restaurant. But it is only for restaurants with air conditioning facility. If there is centralised air conditioning system, for instance if the restaurant is inside a mall, service tax can be charged as well.

Service tax is 12.36 per cent but a 60 per cent abatement is granted, which means what is chargeable is 4.944 per cent. If you see that a restaurant owner has charged you total service tax of 12.36 per cent or anything more than 4.944%, you can question him and take him to consumer court.

4. VAT (Value Added Tax). This is only applicable for the food that is made in the restaurant. So for instance, VAT cannot be charged for bottled water which is already charged at MRP (maximum retail price) that is inclusive of all taxes. Though VAT rates are different for food items and drinks, some restaurants charge a flat VAT rate of the total bill. In this case, you can ask for separate food and drinks bill. VAT differs from state to state.

Like to eat out? Know your food taxes
In Numbers:

Food = Rs 1,000

Service charge @10% = Rs 100

Service tax @4.944% (food + service charge) = Rs 54.38

VAT @15% (food + service charge) = Rs 165

TOTAL BILL = Rs 1,319.38

Hope we have brought some clarity in your money matters. Bon appetit!

Mar 19, 2015 20:14

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