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Difference Between Service Tax and Service Charges

So today department of consumer affairs announces today that it is discretion of consumer to pay service charges to restaurant or not. Most of you guys got it confused with Service tax so in this post we will tell you the basic  Difference Between Service Tax and Service Charges .

 

Difference Between Service Tax and Service Charges :

Service Tax :- It is duty of every service provider to charge service tax from the consumer and pay it to government. Current rate of service tax is 15%. On restaurants it is 6% ( 40% of 15%). This service tax is our responsibility to pay to service  provider and we can’t deny it. this service tax is major source of revenue for the government. Government use it for developing country and providing basic amenities to citizens of country

On the other hand

Service Charge : Service charge is charged by restaurants to earn extra income. Usually the rate of service charge is 10 % but some restaurants charge it upto 20%. These charges goes directly in the pocket of restaurant owner. we generally mistook it as service tax. we can Difference Between Service Tax and Service Charges  with the help of this sample bill.

Difference Between Service Tax and Service Charges
Difference Between Service Tax and Service Charges

In this we can see both Service tax and Service charge in this bill separately . Here Service tax is Just 368 on Approx 6000 rs bill while restaurant have charged 676 ( 10% ) Service charge on it. Rs 368 (Service tax) has to be deposited with the government within specified time where as 676 ( Service Charge) goes directly into the pocket of restaurant owner.

So if we take above example we have now right to refuse to pay 676 i.e the service charge amount and not the service tax amount which is 368 only.

 

So here is the conclusion of Difference Between Service Tax and Service Charges

Service Tax Service charge
Obligation Mandatory volantry
Revenue Government Restaurant
Rate 6% 10%

I hope i have cleared all your doubts regarding Difference Between Service Tax and Service Charges . If you still have any doubts then do comment below and keep visiting canotes.in  for more such updates 🙂

Thank You

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