A man waits for his order to arrive at a cafe. When the waiter moves towards him,carrying his food,the mans face breaks into a smile that is wiped out almost immediately; he sees the waiter taking a massive bite out of his sandwich. Now,this was just an old advert for a completely unrelated service,but its a pretty accurate description of how most people react when they see the restaurant bill at the end of a meal. Most patrons at cafes and restaurants think they have a fair idea of how much their bill is going to come up to,making rough mental calculations while ordering. More often than not,however,when the bill does appear,the average diner is flummoxed by how the different taxes and charges inflate the bill.
Heres a crash course:
Service Charge: This is a separate charge that the restaurant places for rendering services to its patrons. There is no standard rate or amount for the service charge; some restaurants dont have it,others usually charge between 5 and 10 per cent. What most people dont realise is if the restaurant has already placed a service charge,leaving a tip is not necessary.
VAT (Value Added Tax): This tax is placed on the total amount after the service charge is added. The VAT rate is state-specific. In Maharashtra,patrons are charged 12.5 per cent VAT.
Service tax: This is a separate tax levied by the government since April on services rendered by an air-conditioned restaurant. It is effectively charged as an extra 4.92 per cent on the bill,irrespective of whether the patron is seated in the AC or non-AC area.
Seventy-year-old Salim Khan,a retired export manager who eats out about twice a month,says the new service tax rules are almost like extortion! To 22-year-old Haji Mohammad Usman,the new service tax rules is tantamount to double taxation. I feel that we are concentrating our taxes in the wrong places. I can no longer afford fine-dining restaurants anymore and have to make do with fast food, he says. Usman adds that hed much rather go to a restaurant that displays the amount with all charges included. Id rather not sit there and calculate the amount before knowing whether to eat there at all, he says. Asked if he knew the difference between service tax and service charge,Usman says he always thought them to be the same. The rules have also changed his tipping habits. I dont tip waiters at all anymore. The reason is simple: I am spending much more money on the bill just to pay the taxes,so I can’t spare more, he says.
Eating out about thrice a week,22-year-old student Kunal Bankar says since the new service rules place additional tax on AC restaurants,hes become more conscious in picking where to eat. AC restaurants are more expensive and I like to spend only about Rs 150 for a meal,so it is out of bounds on regular days, says Bankar.
Komal Jagtap,who also eats out once a week,did not know of the changes in the service tax levels. But she is categorical that a menu which has no fine print is definitely preferred. I have also never really paid attention to the difference between service tax and service charge. There are many things in the bill that one does not understand. Its so much easier if the prices on the menu are what one is actually going to pay from their pockets, she shares.