Decoding a Restaurant Bill

While looking for a place to eat, we do have a look at the average cost for two (ACT) to get a fair idea as to how big a hole it is going to create in our pocket. On the other hand, we end up paying a lot more than the ACT usually mentioned on the websites. It won’t come as a surprise that we end up paying a much higher amount because of the taxes levied on every bill generated. Here’s why we decided to sought a clarification regarding the same. Following are the 3 types of taxes/charges generally levied at restaurants.

Service Charge

Ranging from 4 to 10 percent (some may charge even more), the charge is collected by the restaurants for rendering its service to you. If the details regarding this charge is not mentioned on the menu, we can go ahead and question the administration.
This charge is levied by the restaurants and NOT the government.

Service Tax

Service Tax is levied by the government on 40% of your total bill. It is believed that the service charge alone is usually not enough for the hospitality services rendered at a restaurant, hence the tax. The total bill on which the tax is charged includes Food+Beverages+Service Charge. To simplify, service tax is only levied at AC-Dine in restaurants. Not applicable on home deliveries.
It is worth noting that even if you don’t sit in a Air conditioned part of the restaurant, service tax will still be levied.


VAT is only applicable to items where in the restaurant adds some value to the food/beverages served and not on packaged food items. VAT rates are different for alcoholic beverages and is generally more than 12.50% depending upon the state you are dining in.
Since, service tax is charged on 40% of the total bill; VAT is charged on the entire bill 

Go through the restaurant bill once, before you swipe away your card at the restaurant to get a better understanding of the tax system.

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