Restaurants, eating-joints or messes, which do not have the facility of air-conditioning or central-heating in any part of the establishment are exempt from service tax.
"In other words, only air-conditioned or air-heated restaurants are required to pay Service Tax," the Ministry said in a clarification on applicability of the levy.
In case of air-conditioned or air-heated restaurants, "60 per cent of the value is to be deducted from the total amount charged while applying the rate of Service Tax and tax is to be calculated on the balance 40 per cent," it added.
Prior to June 1, when the rate of Service Tax was 12.36 per cent (including Education Cesses), the effective rate was 4.94 per cent.
At present, Service Tax is chargeable on services provided by restaurants, eating-joints or messes which have the facility of air-conditioning or central air-heating in any part of the establishment at any time during the year in relation to serving of food or beverages.