Here’s How You Can Be Cautious About Restaurants Cheating You With A Misleading Bill Structure

Posted on July 26, 2013 in Specials

By Abhik Chakraborty:

Be it a date, a family’s day out or a lone outing to rejuvenate ourselves, a foodie extravaganza at a good restaurant is a must at the end of the day. And with the advent of fancy restaurants like Pizza Hut, Dominos, or our favourite McDonalds, this culture is getting a mad push in our society with every passing day. Not only the owners of these restaurants, but also the Government, take ample steps to gain revenue from it. And they do it by virtue of their favourite method- Taxes.

There are a few taxes, which are levied on every food item we buy from a restaurant. And anybody can check them, by carefully looking at the bill provided to them. A typical restaurant bill has the items, which you have ordered and their prices. Then there are service charges, service tax and value added tax (VAT) as well.


But many restaurants cheat their customers by making a complex structure of the bill, which is not only ambiguous but also misleading. The main confusion arises between the calculation of service tax and service charge.

Here is a way to carefully calculate the bill levied and to find the proper taxation.

Let’s take the basic bill = Rs 100 (Excluding VAT)
The Service Charge (10 % of original bill of Rs 100) = Rs 10
So now, the sub total of the bill = Rs 110 (Basic bill + Service Charge)
VAT = 13% of Basic bill (Rs 100) (Approximately) = Rs 13
Now we have a Service tax, which normally has the value of 5% of (40% of Subtotal Bill), that is 5% of (40% of Rs 110) = Rs 2.20
So the total bill amounts to = Rs 100 + 13 + 10 + 2.20 = Rs 125.20

The above is the correct way to charge the bill. It has the following important points, which prevent cheating.

1) VAT is charged only on the ‘Basic bill’ and not on the ‘sub total bill’.
2) Service Tax is on 40% of ‘Subtotal bill’ only, and not on the 100% of ‘Subtotal bill

If the above things are taken under scrutiny while paying the bill, then we can be of great help to ourselves. After all, the money saved is the money earned.