Stop restaurants from charging Service Tax on takeaways and home delivery food

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While introducing service tax on restaurants in 2011, the government issued a clarification that the service tax levy is intended to be confined to the value of services contained in the composite contract and shall not cover either the meal portion in the composite contract or mere sale of food by way of pick-up or home delivery. In 2011, service tax obligations were confined only to those restaurants which had a liquor permit. Since 2013, this criterion was dropped and all restaurants which had air-conditioning or central air heating (even if partial) were required to levy and collect service tax.

But, quite a few restaurants accumulate service tax from customers against home delivery or takeaways, but tax experts view that a bill for home delivery of food or a takeaway should not include any service tax.

 



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