What is difference between Service Tax & Service Charge ?
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Tuesday, August 4, 2015
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What is difference between Service Tax and Service Charge ?
Service Charges are typically levied for the services rendered by the vendor (you). Take for an instance, You can adds service charges in your bill which is for services rendered like bringing food to the table, cleaning the table, ambience or entertainment being provided etc.
This charge is not levied by the government and directly goes into the pocket of the restaurant owner. Generally, the charges are between 5- 10 % solely at the discretion of the management or the owner and there are no guidelines provided on it by income tax (IT) authority.
You have to clearly mention in menu that "Service Charges" are applicable. In case there is no disclosure of "Service Charges" in menu, Guest always can question and can refuse to pay. Also, If there is no "Service Charges", means it is a takeaway not Dine-In.
How much % to take the S.Tax & this S.Tax is Total sell include beverages ?
Service Tax is a government cess that is levied at 14% on 40 % value of your total bill (no matter, which item is included in bill even beverages) i.e. effectively, it would be 5.6% on your total bill value (In 2015 union budget, the service tax has been raised to 14 %, previous was 12.36%). It is common in all over India. To charges "Service Tax", you have to apply service tax number.
A small scale service provider has the option of availing service tax exemption in case the aggregate turnover value of taxable services does not exceed Rs. 10 Lacs in a financial year.
Therefore, if the aggregate value of services does not exceed Rs. 10 Lacs in a financial year, the service provider can claim benefit of this service tax exemption and he won't be required to pay any service tax on such services.
Although Service Tax is required to be paid only when the aggregate value of services provided exceeds Rs. 10 Lacs in a financial year, the service tax provider is required to apply for Registration for Service Tax within 30 days of his turnover exceeding Rs. 9 Lacs.
The service provider also has the option of not availing this exemption and pay service tax irrespective of his total aggregate turnover. However, once the service provider starts paying service tax during any financial year, such option shall not be withdrawn during the remaining part of such financial year.
This charge is not levied by the government and directly goes into the pocket of the restaurant owner. Generally, the charges are between 5- 10 % solely at the discretion of the management or the owner and there are no guidelines provided on it by income tax (IT) authority.
You have to clearly mention in menu that "Service Charges" are applicable. In case there is no disclosure of "Service Charges" in menu, Guest always can question and can refuse to pay. Also, If there is no "Service Charges", means it is a takeaway not Dine-In.
How much % to take the S.Tax & this S.Tax is Total sell include beverages ?
Service Tax is a government cess that is levied at 14% on 40 % value of your total bill (no matter, which item is included in bill even beverages) i.e. effectively, it would be 5.6% on your total bill value (In 2015 union budget, the service tax has been raised to 14 %, previous was 12.36%). It is common in all over India. To charges "Service Tax", you have to apply service tax number.
A small scale service provider has the option of availing service tax exemption in case the aggregate turnover value of taxable services does not exceed Rs. 10 Lacs in a financial year.
Therefore, if the aggregate value of services does not exceed Rs. 10 Lacs in a financial year, the service provider can claim benefit of this service tax exemption and he won't be required to pay any service tax on such services.
Although Service Tax is required to be paid only when the aggregate value of services provided exceeds Rs. 10 Lacs in a financial year, the service tax provider is required to apply for Registration for Service Tax within 30 days of his turnover exceeding Rs. 9 Lacs.
The service provider also has the option of not availing this exemption and pay service tax irrespective of his total aggregate turnover. However, once the service provider starts paying service tax during any financial year, such option shall not be withdrawn during the remaining part of such financial year.
