Service Tax hiked by 2% - Hotel accommodation, eating out to become expensive

Taxes now accounting for over 30% of the bill at restaurants because of the hike in service tax from 10% to 12%

Travel News
Travel News

Traveling Indians will have to shell out more when they stay in hotels. Eating out has also become more expensive with taxes now accounting for over 30% of the bill you settle at restaurants because of the hike in service tax from 10% to 12%. 

It was in the last budget that hotel accommodationwith a daily tariff of over Rs 1,000 and air-conditioned restaurants serving liquor came under the service taxnet. 

Taxes would account between 30 to 36% of the food bills after the proposed hike. The tax component includes a value-added tax of 12.5% to 14%, a service tax of 12% and service charge of 8% to 10%. 

Though service charge, basically a tip, is not compulsory, several restaurants have incorporated it in the bill for the services rendered. 

Room rates too will increase. A five star hotel stay will cost Rs 300 more on existing tariff of about Rs 15,000 per night. 

The hotel industry has a luxury tax, which depending on the various states, ranges from 5% to 12.5%. As on 31 December 2011, there were 2,895 classified hotels having with an estimated inventory of 1.29 lakh rooms in the country.

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