Union Finance Minister Arun Jaitley on Wednesday said restaurants, eating joints or messes without the facility of air conditioning will not be allowed to charge any service tax from the customers.
Jaitley further said restaurants with air conditioning facilities will charge only on 40 percent of the total bill amount. For such restaurants, 60 percent 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 percent.
The Finance Ministry announced this in a clarification on the applicability of the levy that only air-conditioned or air heated restaurants are required to pay service tax.
With the increase in the rate of service tax to 14 percent from June 1, the tax rate is effectively 5.6 per cent of the total amount charged.
After the increase in the rate of the tax, some of the key services that have become costlier are railways, airlines, banking, insurance, advertising, architecture, construction, credit cards, event management and tour operators.