Eating in AC restaurants to be costlier from May 1

NEW DELHI: Eating in air-conditioned restaurants which serve liquor will become costlier from next month as it will attract service tax from May 1.

Bills at these restaurant will go up by three per cent, as the service tax of 10 per cent will be levied on 30 per cent of the billed amount.

Similarly, staying in guest houses, hotels and clubs will attract 5 per cent service tax.

According to a notification of the Central Board of Excise and Customs (CBEC), the service tax proposals of the Finance Bill 2011 will come into effect from May 1.

"...the Central Government hereby appoints May 1, 2011 as the date on which the provisions of the (Finance) Act shall come into force," the CBEC notification said.

Finance Minister Pranab Mukherjee, presenting the Budget 2011-12, had said, "Services provided by air-conditioned restaurants that have licence to serve liquor, by giving an abatement of 70 per cent. Thus, the effective burden will be 3 per cent of the bill".

Besides, bills for short-term accommodation provided by hotels, inns, guest houses, clubs or campsites from May 1 will go up by 5 per cent.

The modified rules for imposing service tax on life insurance polices, as proposed by Mukherjee, too will come into effect from next month.

Under the new rules, the insurer will have an option to pay tax on 1.5 per cent of the gross premium charged from a policy holder.

The Government has also rescinded a 2006 notification, which provided exemption to chartered accountants, cost accountants and company secretaries for their services relating to representing clients before a statutory authorities.