Must-Know Facts about Taxes You Pay

Service tax: It is the tax levied by the government on services rendered by restaurants. Service tax is the same in all states. The service tax rate at present is 14.5 per cent (inclusive of Swachh Bharat cess). The restaurant must be air-conditioned for the service tax. Also, customers must know that they cannot be taxed on the full bill, but only on 40 per cent of the bill as directed. Whenever you see service tax on the total bill exceeding about five per cent, you can question it. VAT (value-added tax): VAT is state-specific. The rates can be as low as five per cent and as high as 20 per cent depending upon the state. Moreover, you must know that VAT for food items and drinks (beverages) are different. Many hotels, restaurants and night clubs charge a flat rate on the total bill. In such cases, it is good to ask for separate bills for food and drinks. This should clearly show the different VAT for both the items.