There has been lot of confusion while paying bills in restaurant since the GST rollout. Clear your doubts regarding service charges on your bills.
Service Charges and Service Tax are two Different Things
Service tax was earlier charged by government before GST rollout and is now included since the GST rollout. Service charge is charged by the restaurant and it has nothing to do with government. Service tax, which now comes under GST is paid to the government. Earlier service tax was paid on service charge and VAT on Food items or beverages. The rates are different for different types of restaurants. A restaurant that doesn’t have AC and doesn’t serves liquor will charge GST at 12% while a restaurant with AC (serves or doesn’t serves liquor) will charge GST at 18%.
Bill Charged from the End Customers
A person who eats a pizza of 500 in an AC restaurant will have to pay tax at 18% followed by a 10% service charge levied by the restaurant. In the end he will have to pay 500+ 90 of GST + 50 as service charge to the restaurant. A restaurant usually charges 10% on service. Hope this clears your doubt.