Service Tax Regime on Hotel Accommodation, Restaurant Services Restructured

Hotel accommodation, in excess of declared tariff of Rs. 1000 per day and service provided by air conditioned restaurants that have license to serve liquor are the new services which have been brought under the service tax net.

While proposing to levy service tax on these services, the Union Finance Minister, Shri Pranab Mukherjee has said that the hotel accommodation with declared tariff of over Rs. 1000 per day will have to pay the service tax with an abatement of 50%. This will mean an effective burden of only 5% of the amount charged.

Air conditioned restaurants with license to serve liquor will now be paying service tax with an abatement of 70%. The effective burden will be 3% of the bill only in this case.

Source : Equity Bulls

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