Circular No. 184/3/2015-ST Dated the 3rd June, 2015
F. No. 334 / 5 /2015-TRU (Pt.)
Government of India
Ministry of Finance
Department of Revenue
(Tax Research Unit)
***
Government of India
Ministry of Finance
Department of Revenue
(Tax Research Unit)
***
Dated the 3rd June, 2015.
Subject: Clarification on rate of service tax
on restaurant service – regarding.
The Service Tax rate has been increased to 14% with effect
from 1st June, 2015. Certain doubts have been raised in regard to abatement
on value of services provided in relation to serving of food or beverages by a
restaurant, eating joint or a mess, having the facility of air-conditioning
or central air-heating in any part of the establishment, at any time during
the year.
2. Matter has been examined. Valuation of services provided
in relation to serving of food or beverages by a restaurant, eating joint or a
mess having the facility of air-conditioning or central air-heating in any
part of the establishment, is determined as provided in rule 2C of the
Service Tax (Determination of Value) Rules, 2006. In the said rule, service
portion in an activity wherein goods, being food or any other article of human
consumption or any drink (whether or not intoxicating) is supplied in any
manner as a part of the activity, at a restaurant has been specified as 40
percentage of the total amount charged for such supply. In Budget, 2015, no
change has been made in abatement and the rate of service tax on the abated
value has been increased to 14% with effect from 1st June, 2015.
Therefore, effective service tax rate would be 5.6% (14% of 40%) of the total
amount charged.
Hence, with the
increase in the applicable rate of service tax from 12.36% (including education
cesses) to 14%, the effective rate on such establishments has increased from
4.9% to 5.6% of the total amount charged.
3. It is
further clarified that exemption from service tax still continues to services
provided in relation to serving of food or beverages by a restaurant, eating
joint or a mess, other than those having the facility of air-conditioning or
central air-heating in any part of the establishment, at any time during
the year.
4. All
concerned are requested to acknowledge the receipt of this circular.
5. Trade
Notice/ Public Notice to be issued. Wide publicity through local news media including
vernacular press may be given. Hindi version shall follow.
Yours
faithfully,
(Akshay
Joshi)
Under
Secretary to Government of India
