Centre to issue advisory against service charge on food bills

All states support GST barring Tamil Nadu Jaitley

"A number of complaints from consumers have been received that hotels and restaurants are following the practice of charging "service charge" in the range of 5-20 per cent, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him", it had said. Businesses have often complained that India's complicated tax system leaves them grappling with a mesh of separate duties levied by each of the country's 29 states, and goods are often stranded for hours or even days at state borders as payments are worked out. But whether these will attract tax under GST is still debatable.

He also said that some services which now have less than 15 per cent tax rate may attract lower rates.

Wednesday's presentation by Adhia, in the presence of the Prime Minister, served as a "good opportunity" for ministers to understand the intricacies of the new tax regime, a senior government official told ET, speaking on the condition of anonymity.

At present, there are around 60 services which are absolved from service tax, including training, human services, and religious journey. In a few cases, the taxes may increase, but not in all cases. The nod paves the way for the roll out of one-nation-one-tax regime from 1 July 2017. "Every year, the Council will meet and revise rates", he said.

The GST rates will be discussed by the powerful GST Council on May 18-19.

He also informed that the live testing of GST is scheduled to begin from first week of May. State-levied taxes that would be subsumed by the GST include VAT, sales taxes, entertainment and gambling taxes, the luxury tax, certain entry taxes, and related state surcharges.

Despite the shortfalls, Srivastava says that "given the complications of the size of the Indian economy, it might be useful to start off with a functioning model and then go on reforming it as matters progress".

In order to check unfair practices of imposing service charge on food and drink bills, the Government is mulling issuance of an advisory to all States, asking them to crack down on such wrong methods used by restaurants and other eatery outlets as well.