Restaurants, eating-joints or messes which do not have the facility of air-conditioning or central air-heating are exempt from service tax, the Finance Ministry said.

In other words, service tax is applicable to only air-conditioned or air-heated restaurants.

Service Tax is a type of tax that you pay on services rendered.

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 beverage, will attract service tax.

In respect of such air-conditioned or air-heated restaurants which are required to pay Service Tax, 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.

From June 1, 2015, the rate of Service Tax will be charged at 14 per cent, the effective rate of tax will be 5.6 per cent of the total amount charged.

Earlier, the rate of Service Tax was 12.36 per cent (including Education Cesses), the effective rate was 4.94 per cent.

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