Calculation of service tax and vat

[Atul Anand]

I am running a restaurant. I am charging VAT 12.5% on sale of food. but I am not charging VAT on service charges provided by us. For example: I am suppling food of Rs.2496.00. charge VAT 12.5% on Rs.2496.00 is Rs.312.00. I am also charging 10% service charges on Rs.2496.00 is Rs.249.6 . On what amount I should charge the VAT on Rs.2496.00 or Rs.2496+249.6. What is correct?

You have to calculate the tax on the entire amount , which includes service tax

I am of the view that your activity would only attract VAT and not service tax. VAT should be calculated on the entire amount including service charges component charged as it would also form part of price of the food supplied.

Only VAT is levied @12.5%

AI Summary

VAT on restaurant charges should be calculated on the total billed amount, including service charges.
The supply of food is subject to VAT, and VAT's taxable base includes service charges added to the bill because those charges form part of the price; respondents advised calculating VAT on the entire billed amount and indicated the activity attracts VAT only, not service tax.