Service tax only in AC restaurants; effective rate 5.6%

New Delhi,June-10  Service tax will not be levied on customers dining in restaurants without air conditioning facility or central heating, the finance ministry has clarified.

Even the restaurants that have ACs or central heating will levy service tax only on 40% of the total bill amount, the ministry said in a statement. In case of air-conditioned or air-heated restaurants, "60% of the value is to be deducted from the total amount charged while applying the rate of service tax and tax is to be calculated on the balance 40%", it added.

The clarification follows confusion over the levy and some reports of overcharging after the higher service tax rate of 14% became applicable from June 1.

Source: TOI