Service Tax Rate – F & B Services at AC Restaurant

Service Tax Rate – Food & Beverages Services provided at AC Restaurant

Valuation of Service Portion – Food & Beverages Services

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.

Service Tax Rate – Food & Beverages Services provided at AC Restaurant after Budget 2015

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.

Exemption from Service Tax – Services provided at Non-AC Restaurant

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.

Ref. Service Tax Circular No. 184/3/2015-ST Dt. 3rd June, 2015

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