Exempting the Non AC restaurants from service tax - Is it fair?
Service tax is the tax which is levied by the
government on the service providers, on certain transactions but is actually
borne by the customers.
Recently, the finance ministry of India exempted the Non AC restaurants from paying the service tax. The service tax which is imposed on the heated and AC restaurants of the country have increased from 12.36% to 14%.
Now, let's take a look on whether it is fair to exempt the non Ac restaurants from the service tax or not?
Yes – It is fair
1. Not Expensive – Non AC restaurants are not much expensive when compared to the Ac restaurants. The food items are charged a high rate in the AC restaurants. Most of the Ac restaurants also provide a peaceful and attractive ambience. Thus, service tax should be levied on these restaurants rather than non ac.
2. Impossible mission – There are numerous non ac restaurants in India and it is impossible for the tax officials to keep a track about all the restaurants. It may turn out to be difficult for them to check whether the non Ac restaurants provide the tax or not. Thus, these efforts should be better spent in some other areas.
3. No advanced facility – AC restaurants provides a lot of extra facilities such as free Wi-Fi, a stage for dance and song and certain other services for the purpose of entertainment. Non Ac restaurants do not provide most of these facilities.
These are the luxuries which only well to do people can afford. And, those dining at such AC restaurants definitely fall in this category.
Thus, service tax should be charged on the AC restaurants rather than Non AC restaurants.
No – It is not fair.
1. Wrong move – It is not a right move to levy the service tax just on the AC restaurants. It will create a complicated tax structure and the commercial activities would be widely affected.
2. Violates principle – The decision of exempting the non ac restaurants from service tax violates the equity principle of taxation. A popular non ac restaurant collects a ten times larger revenue and yet will remain outside the tax net.
3. Loss of business – Most of the people would now like to dine in non restaurants due to the increase in the price. This will bring a downfall of all the AC restaurants in the market. It may finally affect the Indian economy.
4. Fake promises – Many a times, non ac restaurants promises all the facilities and charges more. At times, these promises turn out to be fake ones. Thus, the service tax should have been charged on all the restaurants, irrespective of what facilities they provide.
The dishes at many Non AC restaurants are charged as high as AC restaurants. How can the customers paying the same amount as the customers of a AC restaurants be labeled *not that well to do*
5. Serving Liquor - Many Non AC restaurants serve liquor. How can someone who can afford to drink liquor be termed *not well to do* and why should a service tax be not levied on them?
Conclusion
A good tax policy should be kept simple but if the simplicity is removed, it may create disputes.
It is right on part of the government that the Non AC restaurants are excluded from the service tax. The government has considered the needs of all the people from various income groups.
Middle and low income group people can now easily take their families out for a lunch or a dinner at a non restaurant without paying any extra charges.
Recently, the finance ministry of India exempted the Non AC restaurants from paying the service tax. The service tax which is imposed on the heated and AC restaurants of the country have increased from 12.36% to 14%.
Now, let's take a look on whether it is fair to exempt the non Ac restaurants from the service tax or not?
Yes – It is fair
1. Not Expensive – Non AC restaurants are not much expensive when compared to the Ac restaurants. The food items are charged a high rate in the AC restaurants. Most of the Ac restaurants also provide a peaceful and attractive ambience. Thus, service tax should be levied on these restaurants rather than non ac.
2. Impossible mission – There are numerous non ac restaurants in India and it is impossible for the tax officials to keep a track about all the restaurants. It may turn out to be difficult for them to check whether the non Ac restaurants provide the tax or not. Thus, these efforts should be better spent in some other areas.
3. No advanced facility – AC restaurants provides a lot of extra facilities such as free Wi-Fi, a stage for dance and song and certain other services for the purpose of entertainment. Non Ac restaurants do not provide most of these facilities.
These are the luxuries which only well to do people can afford. And, those dining at such AC restaurants definitely fall in this category.
Thus, service tax should be charged on the AC restaurants rather than Non AC restaurants.
No – It is not fair.
1. Wrong move – It is not a right move to levy the service tax just on the AC restaurants. It will create a complicated tax structure and the commercial activities would be widely affected.
2. Violates principle – The decision of exempting the non ac restaurants from service tax violates the equity principle of taxation. A popular non ac restaurant collects a ten times larger revenue and yet will remain outside the tax net.
3. Loss of business – Most of the people would now like to dine in non restaurants due to the increase in the price. This will bring a downfall of all the AC restaurants in the market. It may finally affect the Indian economy.
4. Fake promises – Many a times, non ac restaurants promises all the facilities and charges more. At times, these promises turn out to be fake ones. Thus, the service tax should have been charged on all the restaurants, irrespective of what facilities they provide.
The dishes at many Non AC restaurants are charged as high as AC restaurants. How can the customers paying the same amount as the customers of a AC restaurants be labeled *not that well to do*
5. Serving Liquor - Many Non AC restaurants serve liquor. How can someone who can afford to drink liquor be termed *not well to do* and why should a service tax be not levied on them?
Conclusion
A good tax policy should be kept simple but if the simplicity is removed, it may create disputes.
It is right on part of the government that the Non AC restaurants are excluded from the service tax. The government has considered the needs of all the people from various income groups.
Middle and low income group people can now easily take their families out for a lunch or a dinner at a non restaurant without paying any extra charges.
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