The Ministry of Finance on Tuesday clarified that only restaurants and eating places that have air-conditioning can charge service tax. And the tax will be levied on only 40 per cent of the amount charged.
“Restaurants, eating joints or messes which do not have air-conditioning or central air-heating in any part of the establishment are exempt from service tax. In other words, only air-conditioned or air-heated restaurants are required to pay service tax,” it said.
The effective tax rate, after the increase as of June 1 to 14 per cent, will be 5.6 per cent of the total amount charged. The education cess is subsumed under the new service tax.
