Further Updates:
Updated November 15th, 2017
The GST on restaurant bills will be as following going forward:
5% GST on all restaurant food and beverage bills except the premium star hotel restaurants
18% GST on restaurants in star rated hotels where per day room charges are Rs.7,500/- and upwards.
Updated July 1st, 2017
With the introduction of GST, the restaurant bill format and calculation is pretty straightforward and simple. The following table summarizes the GST rates on restaurant bills.
| Restaurant Type | GST Rate |
| Non-AC, Non-Heated Restaurants without bar | 12% |
| AC or Heated Restaurants (With or Without Bar) | 18% |
| Restaurants attached to 5-Star Hotels | 28% |
Important:
- Home delivered or takeaway food from restaurants categories listed above would still attract the respective rates, regardless of the fact that you are not availing Air conditioning or Heating services
- The service charges in the particular restaurant, if any, should not be charged any GST because that’s already covered under GST. If any restaurant does so, you must raise your concern with the management
- If a restaurant is charging GST but if their 15 digit registered GSTIN Number is not present in the bill, you don’t need to pay any GST
- Further, you may check the validity of the GSTIN number present in the bill, by searching for the same at the following URL:
Check for fake GST number
Old post on calculating restaurant bill based on VAT, ST, SC etc continues below…
How many times hasn’t your bloated restaurant bill left you clueless as to how components like VAT (Value Added Tax), ST (Service Tax), SC (Service Charge) etc are being calculated?
Worry no more…
Without complicating the matter much, let me explain how a typical restaurant bill break up is arrived at as per the prevailing taxing norms as of June 1, 2015.
VAT, ST and SC
The following are the rules for calculating VAT, ST and SC.
VAT is typically charged at 14.5% on all food items and non-alcoholic beverages (includes, packaged water, juices, mocktail etc).
VAT for alcoholic beverages and cocktails is 5.5%.
SC is charged at restaurant owner’s will. This can vary from 0% to 20%. This is like an in-built tip and if Service charge is levied, it has to be clearly mentioned in the menu.
ST is calculated at 5.6%. Service Tax is actually 14% and it is applicable on 40% of the total bill (Including food total + Service charge).
ST* = 5.6%, i.e. 14% of 40
Notes:
(i). As per the government rule, the Service Tax is applicable only to those restaurants and food joints having the air-conditioning or central air-heating facility
(ii). VAT should not be levied on the Service Charge part. There are some restaurants who do such wrong calculation practices (See comments section)
(iii). ST* has been hiked to 5.8% (Including Swachh Bharat Cess or SBC) after this article was written
(iv). ST* has been hiked further to a total of 6% (Including SBC and KKC – Krishi Kalyan Cess) in 2016
A Sample Restaurant Bill Format and Calculation
Attached here is a sample restaurant bill that I recently (after June 1st, 2015) got from our family dine out.
(Click on the image to Enlarge)
The table below explains how the above bill amount is calculated.
Please note that some restaurants may provide separate bills for alcoholic beverages and the food. In such cases the applicable VAT is different for both the bills.
| Particulars | Amount |
| A. Alcoholic Beverages (330+680) |
1010.00 |
| B. Food & Non-Alcoholic Beverages (170+160+260+320+300+360) |
1570.00 |
| C. Service Charge @ 10% for this place (10% of A+B) |
258.00 |
| D. VAT for Alcoholic Beverages @ 5.5% (5.5% of A) |
55.55 |
| E. VAT for Food & Non-Alcoholic Beverages @ 14.5% (14.5% of B) |
227.65 |
| F. Service Tax @ 5.6%, rounded (5.6% of A+B+C or 1010+1570+258) |
158.93 |
| Total Net (A+B+C+D+E+F) |
3280.13 |
Hope that explains how the final rounded bill amount of Rs.3280/- is arrived at. Next time, please pay attention to your bill details because many restaurants may not have changed their billing system yet.
Happy Dining!
NICE EXPLAIN …… SOME OF PPL WILL SHOUT AT THE CASH POINT PLEASE READ THESE THINGS BEFORE AT ANY RESTAURANT
Dear
i hv doubt in this calculation:
service tax is charges at 40% considering the service component in the value of the goods
if goods is valued at Rs. 100 than the service component is considered at rs 40 and rest 60 is the actual value of the goods thus the VAT should be charged only on Rs 60.
pls consider
Aakash Aggarwal
9910991353
To: Mr Ajith Prasad Edassery
Hello!
According to the Sunday Times of India dated 4 October 2015 (please refer page 1 and page 8),
(1) “Liquor VAT” = Liquor and Service Charge on Liquor.
Therefore, your 5.5% of Liquor VAT on Alcoholic Beverages should have been Rs. 61.11 instead of Rs. 55.55.
(2) “Food VAT” = Food and Service Charge on Food.
Therefore, your 14.5% of VAT on Food and Non-alcoholic Beverages should have been Rs. 250.42 instead of Rs. 227.65.
If Times of India is actually right, then you have been billed Rs. 28.33 less by the restaurant.
If you think the Times of India is wrong, please let me know.
Thanks for your attention.
Suhaas
Suhas,
The Service Charge is applicable only on the actual food and drinks components alone. There’s no logic in applying Service Charge on VAT component too which is a government tax for which the restaurant do not provide any value added service. In other words VAT and Service Charge are to be separately calculated and added to the bill. If any restaurant is doing otherwise, their billing system may be wrong or tweaked for simplicity (read the logic below).
Having said that, I won’t be surprised if any particular restaurant is using its own logic in applying service charge. If you really see it wouldn’t matter much, as the rate at which service charge is levied is their own discretion. So instead of 12% SC (using my logic), if they tweak the logic and charge 10% (using your logic), it may be still okay. One should only examine the bill to make sure that the government taxes (VAT and ST) are not over charged.
Hi Mr. Edassery,
Food and Beverages VAT are being calculated including service charges as shown in the following websites.
http://www.jagoinvestor.com/2013/08/service-tax-and-vat-on-restaurant-bills.html
http://taxpaisa.com/vat-and-service-tax-on-restaurant-bill-and-food/
http://trak.in/tags/business/2015/07/15/service-charge-not-service-tax-restaurant-bills/
http://www.dnaindia.com/money/report-decoding-your-restaurant-bill-service-charge-service-tax-and-vat-2083143
How could all of them be wrong?
Again, thanks for your time.
Sincerely,
Suhaas
I don’t know why people are charging VAT on Service charge too – it’s illegal and don’t make any sense at all. Please read this article http://timesofindia.indiatimes.com/city/hyderabad/Hotels-charge-VAT-even-on-service-charge-tax/articleshow/25349848.cms
Hello…
I do have a doubt..if service tax is charged on an amount @ 40% of that amount × 14.36%..then what about VAT? Actually it should be laid on 60% of that amount × VAT rate ?
Please do inform me the answer as soon as possible..
Hope you will give me a perfect answer.
As per my web reading (I am not a CA or Tax expert) the Service Tax law states that it’s to be levied on 40% of the bill amount. The VAT law states clearly that it’s to be charged on the entire bill (food and beverages bill, here). Hence, the restaurants’ logic seem to have some base.
However, there’s an interesting case and ruling (Thanks to the commenter and a Lawyer Mr. Aakash Agarwal above for pointing me to this case) by the High Court of Uttarakhand whereby it’s mentioned that VAT has to be charged only on the remaining 60% – perhaps apportioned accordingly on food and beverage as applicable. It’s not clear why none of the restaurants have followed it yet. Perhaps, we need an online campaign to get this streamlined.
The link to the case below:
http://taxguru.in/service-tax/vat-leviable-40-restaurant-bill-subject-service-tax.html
YES. I AGREE WITH YOU WAFA.
IF OUT OF RS. 100/- 40% IS SERVICE TAX COMPONANT
THEN VAT TAX COMPONENT SHOULD BE 60%
RS. 40/- FOR SERVICE TAX
RS. 60/- FOR VAT TAX
Vat is 12.5 % and service tax 5.8 %.How could u calculated 14.5% ???
is it too much for customers ?
What parameter used for charging VAT ,SC n ST ??
It’s not my rates but the Government fixed rates 🙂 Only the Service Charge varies from restaurant to restaurant.
Value Added Tax (VAT)
(1) In India, varies from state to state.
(2) For example, in Karnataka food VAT is 14.5%.
Service Tax (ST)
(1) Remains same throughout India.
(2) Earlier, ST was 14% of 40% of the total bill (including service charges) which is the same as 5.6% of the total bill (including service charges).
(3) In 2015, Central Government made it mandatory to add 0.5% to ST toward Swach Bharat Cess program which came into effect from 15 November 2015.
(4) Therefore, ST is 14.5% of 40% of the total bill (including service charges) which is the same as 5.8% of the total bill (including service charges). Hence, AC restaurants are legally entitled to charge 5.8% ST.
Service Charge (SC)
(1) Varies from restaurant to restaurant.
(2) Some restaurants charge 4%, some 10% and some even more.(3) SC should be distributed among staff members.
If you want to know as to why the government is charging certain amount for VAT and ST, you will have to talk to an experienced chartered accountant.
our total bill is rS. 743.00 And added Vat Rs. 97.59.
How this charges is calcullated
Hi Ajith,
First & foremost thanks for the enlighting detailed description, which actually helped a lot to me in understanding the architecture of portion of bill remain puzzled since forever.
I actually started paying ‘attention’ rather than paying ‘fraud money’ to many of outlets.
But I still have some doubts though if u please can take a look at them –
1. As mentioned SC is applicable only at AC facilities, still I have come across chains of dinners and fast food corners who are serving in open areas like roof top or within premises of Malls etc who doesn’t exempt us from these taxes. As matter of fact CCD was one of them. Still nobody objects or regulates this harassment of the consumer. Is there any other way to deal with these kind of frauds at a bigger/better scale. Because as already given one example, this amount can turn up in millions at country level scale.
2. Though I am clear about it but still few readers might not read length of conversation with Mr. “Suhaas” and make conclusion. So for them can you edit/add in the description itself that VAT should not be applied on SC.
3. In this tech prone world we all are addicted on wasting time on mobiles for no reason still no one has lil extra time/will to do math at time of paying bill. So are u aware of any mobile app which can readily calculate the bill effectively (given all components are variable and u can customise the tax percentage, food/alcoholic/nonalcoholic price)
Thanks
Ankit
Ankit,
1. I think, we have to deal with such people on a case to case basis and inform the authorities
2. I have updated the article with your suggestion. Thanks.
3. Not sure about any such mobile apps. Even if there’s one, you will have to calculate food/alcohol bill separately and input the same. You could as well use your calculator 😉
Its ST that is to be applied only in AC premises.
SC is service Charge that has nothing to do with govt. Restaurants can charge any amount. Many charge 10%. This is distributed between staff. If there is a Service Charge there is not need to Tip.(or you can tip less depends on how much % you tip)
ST has not been hiked to 14.5 %… It is still 14%… Additional 0.5% is SB cess, and not to be merged with Service tax. ST is cenvatable, but SB cess is not cenvatable as of today. Further ST and SB cess are to be shown separately in the bill
-Ramesh Kumar
there is a Uttrakhand High Court Judgment which favours my contention that the VAT should be charged only on the 60% of the value of the goods. (refer Vally Hotels & Resorts)
Hi Ajith,
I have a query. As mentioned in your article that VAT(14.5%) will be charged on juices,mocktails and MINERAL WATER. Wanted to make sure that do packed items(not made within restaurant premises) are also charged with VAT?
I think no
Hey anyone plz tell me why i have been charged SC on VAT 5% and is it ok or wrong…
Friends please let me know the this fact of VAT that will be charge on 60% of gross. this will also applicable on Construction business where Composite contract are in use (Material+Service)VAT & Service tax together. is that in 60% & 40% ratio VAT will charge on 60% or on total of bill, the client is also deducting WCT 4% in Uttar Pradesh.
Can a single bill have two VAT ?
One at 14.5% and other 20%
Itz burger king restaurant bill.
State : Karnataka
yes.. first VAT(14.5%) is on food ..other is on drinks(coldrink shakes juices,etc)
Can they over charge on packaged drinking water MRP?
No idea. In general nothing ‘when served’ is available at MRP. Just like water, soda or wine bottles.
Wonderful!! this is really one of the most beneficial blogs I’ve ever browsed on this subject.After read this i get some idea about vat charges thank you for sharing this good info with us.
Trying to figure out this bill, any help/explanation would be appreciated.
https://s12.postimg.org/abu5zvkkd/Bill_fishermanswharf.jpg
My basic analysis:
service charge on total bill amount of 5085 = 381.39
reverse calculation: 7.5% (fairly accurate)
vat@14.5% = 281.37
reverse calculation: charged on a value of 1940.48
closest items total is for food+waters = 1930 (discrepancy of 10)
vat@5.5% = 182.11
reverse calculation: charged on a value of 3311
closest items total is for liquor+soda = 3155 (discrepancy of 156)
vat@20% (???) = 43.01
reverse calculation: charged on a value of 215.05
closest items total is nothing really (discrepancy of 215.05)
Rajat,
I went through your bill. This is what I could figure out.
a. Food bill – 1555
b. Alcohol – 3080
c. Non-packaged beverage – 250
d. Packaged beverage – 200
e. Total 5085
f. Service charge @ 7.5% – 381.38 (they rounded to 381.39!)
g. VAT @ 14.5% on food and non-packaged beverage (a + c + service charge on that part)- ~281.37
h. VAT @ 5.5% on alcohol (b + service charge on that part) – ~182.11
Issues:
1) VAT on Packaged beverage is charged at 20% and this is a crime as VAT cannot be charged on packaged foods. Typically, they would have charged a premium on MRP as well and further charged VAT! I doubt if this is really going to the Government.
2) Charging VAT on Service Charges is not good at all. Again, the restaurant must be keeping this money.
What is good?
Service Tax is missing in this bill. I assume that, the restaurant is not Air conditioned or heated and that’s something good in the bill. There are many frauds who charge ST without having an AC restaurant.
Explained Fabulously in Simple & effective manner.,
Its pity that V r being Tax Twice/Thrice,etc. Kindly go through the LInk below
A) https://blog.bankbazaar.com/charges-and-taxes-in-restaurants/36946/
I have following queries:-
1) Plz refer ‘Service Tax'(The restaurant must be air-conditioned for service tax) of “Link-A” mentioned Above
In this context,Suppose Bar has ben constructed in such a manner that One part(Half/Some) is Air-Condtioned & Another Part(Half/Some) is not is Open Area/Pool Side/ Not Air-Conditioned and V have been served in Open Area/Pool Side/ Not Air Conditioned, than should r v liable to pay Service tax?
2) Is percentage of VAT is dependent on Items like Beer would attract differ VAT than Wine/Mocktails/Juicy/Coke,etc ?
Waiting in anticipation of Reply
Regard
Ambuj
1) I doubt if any restaurant can have A/c and non-A/c areas separately billed. If the restaurant is air conditioned or heated, they just charge the ST and that’s fair, I think. For that matter, if it’s cold day and if the a/c is not switched on for practical reasons, could we ask for an exemption on ST on the bill? 🙂
2) Yes, percentage of VAT for alcohol is different from that of mocktails.
Great article!!
When a restaurant gives a discount, how is VAT calculated?
For example, if the food costs a total of Rs.100 and if there is a discount of Rs.10, will VAT be applicable on Rs.100 or Rs.90?
Thanks for your help.
Hmm.. That’s a tricky question Jayadev. I would think that the tax is for what they actually charge you. i.e. for Rs.90/- as in your example.
Can anyone confirm this?
Today i went to hotel….they are saying service tax is added to gross amount…and vat is calculated for the that amount for example.
Gross amount=550
S.T. 5.6= 30.8
S.B. .20= 1.10
K.K. .20= 1.10
VAT 14.5= 84.56
Total. = 668.00
Sir can u plz clarify the correct amount to be paid
That looks good to me, provided the restaurant was Air conditioned.
Can you please help me with the below bill:
Total amount: 1760
Service Charge @ 10%: 176
Total: 1936
VAT @5.5%: 38.7
VAT @14.5%: 153.1
VAT @20%: 35.2
Service Tax @6%: 116.1
Total: 2279
This bill includes alcohol, food and soft drink
By reverse calculating your bill, it looks like you have consumed the following:
Food: 960/-
Alcohol: 640/-
Other / Beverage: 160/-
The 160/- rupees may be contributed by Aerated water or Soda or any imported drink? If you specify your location (Mumbai?) and the type of beverage or other items you consumed, we can conclude the calculation. Rest looks fine.
Thank you for your reply
I had coke and I am from Bangalore
Hmm… I am unaware of this 20% VAT rule. Perhaps, will check with someone in the industry.
When a discount is applied on a bill that has all the three types – Food, Alchohol and other beverages. Where will the discount be applied? We shouldn’t reduce the discount on the gross amount after adding taxes. How do that happen
?
Food 345
Alcohol 1650
ST 5.6% 111.72
SC 5% 99.75
SBC .2% 3.99
KKC .2% 3.99
VAT 20% 296.80
ST on SC 6.01
VAT 14.5% 38.42
VAT 5.5% 20.12
NET 2576
Kindly throw light on this!Seems unfair.
I am yet to figure out the 20% VAT criteria. What type of beverages did you order? Is it some kind of imported stuff or in house brewed beverage?
My tiffin center is adding 5% extra charge as VAT. Is there any such tax on tiffin food.
total amount : 680
KVAT @ 5.00% (+) 10.25
KVAT @ 14.50% (+) 68.88
S.Tax @ 6% 9 (+) 40.80
round off (+) 0.08
————–
net amount 800
Hi..
I’m a Restaurant owner from HUBLI, Karnataka.This was one of the most beneficial blogs I’ve ever browsed specifically on restaurant taxes. Thanks for sharing your knowledge.
Needed some clarity regarding taxes on bottled water and non-alcoholic beverages (with MRP on them) for A/C and Non-A/C sections of a restaurant.
Looking forward for your response. Thank you.
How to calculate food product vat 14.5% if MRP 250 & PTR 20% & PTS 10% what will be vat Amount.
Hi i would like to know if it is necessary for the restaurant to have their Vat no or service tax no or any other no on the issued bill where they have charged us Vat and Service tax and Service Charge .please advise
I didn’t completely understand the query. Could you clarify please?