Canteen of Factories Covered under Factories Act exempted from Service Tax


Author(s): 

Author

Canteens maintained in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year have been exempted from Service Tax with effect from 22-10-2013.

Brief

Service tax is payable on the food bill or beverage bill served at any place where the facility of Air Condition or Air Heating is provided on even a single day are taxable under service tax with effect from 01-04-2013.

If AC or Air Heating Facility is not provided even for a single day during the year in a Restaurant / Food Joint / or Canteen, then Service Tax is not imposable on the Food bill.

CALCULATION

The value of Service on food or beverage bill is 40% of the bill amount and rate of tax is 12.36%.

E.g. On a Bill of Rs. 1000/- for food/beverage served in a place being Canteen/ Restaurant / Food Joint

Service tax is calculated as follows;

Bill Amount 1000/-

Value for the purpose of Service Tax =40% of Rs. 1000 = Rs. 400

Service Tax = 12.36% of Rs. 400 = Rs. 49.44

 

This service tax was applicable even for Canteens of Factories with AC or Air Heating Facility.

Amendment

Now canteens maintained  in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year have been exempted from Service Tax with effect from 22-10-2013.

Effect

1.       If a Canteen is maintained by a Factory which is registered under the Factories Act, 1948

2.       It shall be exempt from Service Tax on Food served in the Canteen

3.       Even If the Canteen is having Air Conditioning or Air Heating Facility

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Date: 
Sunday, October 27, 2013