It is clarified by government that these ‘service charges’ collected by the eateries are retained by them and are not ‘service tax’ imposed by the Government.

It is further clarified that the effective service tax rate in respect of services provided in relation to serving of food or beverage by a restaurant, eating joint or mess having the facility of air–conditioning or central air-heating in any part of the establishment is 5.6% (14% of 40%) of the total amount charged.