Service and other taxes on takeout food

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  1. Pradeep

    Pradeep New Member

    Hello everyone,

    I just read the interesting Computation of Service Tax on Food Served in a Restaurant article on your site. Very well written but it doesn't seem to cover the case when we get food home delivered from a restaurant or fast food service. In June last year the Finance Ministry had said that takeaway and home delivery of food may not attract service tax, but after that there's no further news about this issue. We regularly order takeout in office and also sometimes at home and pay hefty charges like VAT on food and beverages, service charge, service tax etc. Can a taxation expert here please clarify what the charges are to be paid (especially in Delhi) for takeout? Is service charge to be paid? What is the VAT on food and beverages? Is service tax still to be paid and if so, what's the percentage?

    Hope someone can help. Thank you.
     
  2. Chartered Club

    Chartered Club Administrator

    Dear Pradeep

    Thanks for your kind words. The following are the answers to your queries:-

    1. Service Charge is at the sole discretion of the Restaurant and Govt cannot do anything in that. Restaurant owners are free to levy any amount as service charge provided it is specifically disclosed and mentioned in the Menu Card

    2. VAT would be levied irrespective of whether you dine in or get the food home delivered.

    3. Service Tax on home delivery is something on which clarity is expected from the Govt. There is no clarity and therefore restaurant owners are themselves confused. Some Restaurants like Haldirams don't levy Service Tax on takeaway whereas other Restaurants do. Everyone is expecting clarity on the same from the govt. According to some CA's, it should be levied and according to others - it should not be levied. The whole industry is awaiting a circular from the govt which would clarify the same
     
  3. maheshkumar

    maheshkumar New Member

    WHEN THERE IS NO CLARITY THEN IT IS ADVISABLE TO COLLECT SERVICE TAX OR ELSE WRITE A LETTER TO THE DEPARTMENT SEEKING REPLY ABOUT THE DOUBT SO THAT THEY CANNOT IMPOSE SECTION 78 OF THE FINANCE ACT AFTERWARDS.
     
  4. Karan Batra

    Karan Batra Well-Known Member

    @maheshkumar : You are right... In the absense of clarity, most restaurant owners are playing safe and are collecting Service Tax on Delivery.... But as a result of this, the end user is getting suffered...

    And that is what is the query of Mr @Pradeep . That why does he suffer. Economic Times, Business Standard have also said that clarity is expected soon because many people have written a letter to dept but sadly no reply from the Govt :(

    What do you would be the decision of the Govt in this regard?
     
  5. Pradeep

    Pradeep New Member

    Dear Karan,

    Thank you so much for your prompt reply.

    Ok, I understand this but when they promise "free home delivery" and still include a service charge is that legal?

    Is there somewhere I can find out what the VAT rate is on food and on beverages (I believe the rates differ)? Also, is this rate the same across the country or does it vary by state?

    Honestly, how long does it take them for such a small issue? Can't they quickly decide one way or the other so both commercial establishments and customers can have clarity? Very disappointing I must say.

    @maheshkumar: Karan is right, why should we customers suffer? If we have to pay so be it, but it should be made clear and not left ambiguous like it has been for so many months now.
     
  6. Karan Batra

    Karan Batra Well-Known Member

    @Pradeep

    1. Service Charge differs from Restaurant to Restaurant. If it is stated in the menu card, they can charge it.

    2. VAT Rates differ from state to state and from product to product. You can refer this link for checking VAT Rates on different products in New Delhi - http://allindiantaxes.com/delvatschedule.php

    3. Keeping fingers crossed for a clarification from Govt on Service Tax on Home Delivery
     
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