After making service charge voluntary, the government has upped the ante against hotels and restaurants that do not pass the money to staff and workers.
The income tax department has said that such hotels and restaurants will be liable to pay income tax on such charges new agency PTI reported.
The IT department asked its officers to examine the hotels and restaurants to see if it is non- reporting or underreporting of service charges are collected by them. The IT department come into action when commerce ministry informed them that some restaurants are still charging some service tax.
The consumer can refuse to pay the service charge as it is voluntary, in June survey this year 32% of consumers are unaware about the service charge added to their bill.
The service charge amount collected is not evenly distributed among staff and workers of the hotels and restaurants. As a service charge is an amount a customer can voluntarily pay for the services provided by staff and employees of a hotel and restaurant.
A service charge relives you the obligation of calculating the exact percentage of the bill that you need to leave as a tip. Normally servers do not expect you to leave anything extra for them once you have paid the service charge.
But now some consumers are breathing easy as per government has said that the service charge you paid in restaurants and hotels is not mandatory.
the disclosure and disbursement details of service charge transactions as contained in P&L(profit & loss) a/c, i/e (income/expenditure) statement and balance sheet should be critically examined to ascertain whether receipts from service charges are fully disclosed as part of the turnover of the hotel/restaurant or not," the CBDT said.
It said that in situations where it is found that the receipts have not been passed on to the staff or workers by the hotel/restaurant or there is some under-reporting or non-reporting, the receipts should be duly brought to tax in the hands of concerned hotel/restaurant.
The guidelines said that the bill presented to the customer may clearly display that service charge is voluntary and the service charge column of the bill may be left blank for the customers to fill up before making payment.
