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Saurabh Bansal (Tax Consultant)     16 May 2010

VAT on service charge???

Is service charge to be levied on service charge???

For example...

I went to a restaurant and they billed me as follows :

Goods                                         750

Service charge @ 10 %           075

Total                                            825

VAT @ 12.5%                            103

Total                                            928


So is the bill correct????

Is VAT to be levied on service charge also???/

And what if the dealer pays service tax on the service charge??

then will VAT be levied on service tax also??? 


 3 Replies

Saurabh Bansal (Tax Consultant)     17 May 2010


just checked and confirmed it....

VAT will be charged on service charges also...

and if any service tax is paid then VAT will be charged on such service tax also...

Sivadas Chettur (Chartered accountant)     18 May 2010

Dear Bansal,


                                  If you look into the definition of "turnover" of almost all state VAT laws you can note that it means " the aggregate amount for which goods are either bought or sold, supplied or distributed by a dealer". Thus this aggregate amount is wide enough to include the service tax also.




Rohan S (Area Manager)     28 October 2012

Hello Mr. Bansal,

I had a same query though but also wanted to know the source of the solution.

From whom did you get the reply from, which  legal department?

Do let me know the same, it would be of great help.


Rohan S.

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