Circular No. 184 / 3 /2015 - ST D ated the 3 rd June , 201 5 F. No. 33 4 / 5 /2015 - TRU (Pt.) Government of India Ministry of Finance Department of Revenue (Tax Research Unit) *** Dated the 3 rd June, 2015 . To Chief Commissioner of Customs and Central Excise (All) Chief Commissioner of Central Excise & Service Tax (All) Director General of Service Tax Director General of Central Excise Intelligence Director General of Audit , Principal Commissioner / Commissioner of Customs and Central Excise (All) Principal Commissioner/ Commissioner of Central Excise and Service Tax (All) Principal Commissioner/ Commissioner of Service Tax (All) Madam/Sir, Subject: Clarification on rate of service tax on restaurant service - regarding. The Service Tax rate has been increas e d to 14% with effect from 1 st June, 2015. Certain doubt s have been raised in regard to abatement on value of s ervices provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, having the facility of air - conditioning or central air - heating in any part of the establishment, at any time during the year . 2. Matter has been examined. Valuation of services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess having the facility of air - c onditioning or central air - heating in any part of the establishment , is determined as provided in rule 2C of the Service Tax (Determination of Value) Rules, 2006 . In the said rule , s ervice portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity, at a restaurant has been specified as 40 percentage of the total amount charged for such supply . In Budget, 2015, n o change has bee n made in abatement and t he rate of service tax on the abated value has been increased to 14% with effect from 1 st June, 2015 . Therefore , effective service tax rate would be 5.6% (14% of 40%) of the total amount charged . Hence, with the increase in the applicable rate of service tax from 12.36% (including education cesses) to 14%, the effective rate on such establi shments has increased from 4.9 % to 5.6% of the total amount charged . 3. It is further clarified that exemption from service tax still continues to s ervices provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air - conditioning or central air - heating in any part of the establishment , at any time during the year. 4 . All concerned are requested to acknowledge the receipt of this circular. 5 . Trade Notice/ Public Notice to be issued . Wide publicity through local news media including vernacular press may be given . Hi ndi version shall follow. Yours faithfully, ( Akshay Joshi ) Under Secretary to Government of India

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