Ever wonder why you had to pay an exorbitant amount of money for a restaurant bill that you thought would be less? That’s because restaurants are tricking you into paying taxes for services not even provided by them or overcharging on items that shouldn’t be taxed. A senior Finance Ministry official speaking to Sunday Standard said that they have received numerous complaints on restaurants overcharging their customers for service tax and VAT charges which are being levied on items not prepared by the restaurant.
According to the recently modified service tax policy, restaurants with air conditioners and heating system are responsible for charging 14% on only 40% of the total bill as service tax. Instead, restaurants are charging the tax for the entire bill. Not only are the service taxes being added unfairly to the in house bill, it is being levied on home delivery as well. The Finance ministry, in the recent tax policy changes, had strictly concluded that services charges should be not charged on home delivery.
Similarly, VAT charges are also being added for items not prepared in the restaurant, such as bottled water or packaged foods. According to the official, service tax should only be added for items exclusively prepared in the restaurant.
What can be done to prevent restaurants from overcharging their customers? According to Atul Kumar Gupta, chairman, indirect tax committee, a software system should be in place for each restaurant in the country managed by the tax committee and the transactions should be diligently recorded so as to discourage overcharging.
So, the next time you look at the bill and find yourself being overcharged, you can directly bring it to the attention of the tax department.