{"id":12533,"date":"2018-11-21T12:55:42","date_gmt":"2018-11-21T07:25:42","guid":{"rendered":"http:\/\/itatonline.org\/info\/?p=12533"},"modified":"2018-11-21T12:55:42","modified_gmt":"2018-11-21T07:25:42","slug":"cbdt-directive-reg-taxability-of-services-charges-charged-by-hotels","status":"publish","type":"post","link":"https:\/\/itatonline.org\/info\/cbdt-directive-reg-taxability-of-services-charges-charged-by-hotels\/","title":{"rendered":"CBDT Directive Reg Taxability Of Services Charges Charged By Hotels"},"content":{"rendered":"<p>The CBDT has issued an important directive dated 19th November 2018 0n the issue of treatment of service charge taken from customers by the hotels\/restaurants under the Income-tax Act, 1961. <\/p>\n<p><script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script><br \/>\n<!-- responsive --><br \/>\n<ins class=\"adsbygoogle\"\n     style=\"display:block\"\n     data-ad-client=\"ca-pub-6440093791992877\"\n     data-ad-slot=\"6406297397\"\n     data-ad-format=\"auto\"><\/ins><br \/>\n<script>\n(adsbygoogle = window.adsbygoogle || []).push({});\n<\/script> <\/p>\n<div class=\"journal2\"><a href=\"https:\/\/itatonline.org\/info\/cbdt-directive-reg-taxability-of-services-charges-charged-by-hotels\/cbdt-service-charges-hotels\/\" rel=\"attachment wp-att-12534\">Click here to download CBDT&#8217;s directive dated 19th November 2018<\/a><\/div>\n<blockquote><p>F.No. 225\/382\/ 2018-ITA.II <\/p>\n<p>Government of India<br \/>\nMinistry of Finance<br \/>\nDepartment of Revenue (CBDT)<br \/>\nNorth Block, New Delhi,<br \/>\nthe 19th of November, 2018 <\/p>\n<p>To All Principal Chief-Commissioners of Income-tax <\/p>\n<p>Subject: Treatment of service charge taken from customers by the hotels\/restaurants under the Income-tax Act-reg.- <\/p>\n<p>Sir\/Madam, <\/p>\n<p>The Ministry of Consumer Affairs, Government of India vide letter dated 21.04.17 (copy enclosed) had issued a Guideline on Fair Trade Practices related to charging of service charge from consumers by hotels\/restaurants. <\/p>\n<p>These Guidelines were given to address the issue of unfair and restrictive trade practices adopted by some hotels\/restaurants by way of charging tips\/gratuities from customers without their express consent in the name of service charge. <\/p>\n<p>In effect, payment of service charge by the customer to a hotel\/restaurant was declared to be completely optional vide the aforesaid Guideline. <\/p>\n<p>2. In the context of above mentioned Guidelines, the Ministry of Consumer Affairs has brought to the notice of the Board that some hotels\/restaurants are still pre-emptively deciding upon the service charge without allowing the customers to voluntary decide whether they actually want to pay the service charge or not. <\/p>\n<p>It has further been submitted by the Ministry of Consumer Affairs that there is every likelihood that such amount collected as service charge from the customers in a compulsory manner does not actually reach the workers and is instead kept by the hotel\/restaurant owners. <\/p>\n<p>3. Thus, while framing assessments or carrying out verification under various provisions of the Income-tax Act, 1961 in the case of hotels\/restaurants, it is necessary to examine whether there is any under-reporting or non-reporting of additional income collected in the name of service charge. <\/p>\n<p>Further, the disclosure and disbursement details of service charge transactions as contained in the P&#038;L A\/c, I\/E statement &#038; Balance-sheet should be critically examined to ascertain whether the receipts from service charges are fully disclosed as part of the turnover of the hotel\/restaurant or not. <\/p>\n<p>In situations, where it is found that the receipts have not been passed on to the staff\/workers by the hotel\/restaurant or there is some under-reporting or non- reporting, the receipts should be duly brought to tax in the hands of concerned hotel\/restaurant. <\/p>\n<p>4. It is requested that field formations should be duly sensitized on this issue. <\/p>\n<p>5. This issues with the approval of Chairman, CBDT. <\/p>\n<p>Under Secretary (ITA.II), CBDT<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>The CBDT has issued an important directive dated 19th November 2018 0n the issue of treatment of service charge taken from customers by the hotels\/restaurants under the Income-tax Act, 1961<\/p>\n<div class=\"read-more\"><a href=\"https:\/\/itatonline.org\/info\/cbdt-directive-reg-taxability-of-services-charges-charged-by-hotels\/\">Read more &#8250;<\/a><\/div>\n<p><!-- end of .read-more --><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1,7],"tags":[],"class_list":["post-12533","post","type-post","status-publish","format-standard","hentry","category-all-information","category-others"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/posts\/12533","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/comments?post=12533"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/posts\/12533\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/media?parent=12533"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/categories?post=12533"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/info\/wp-json\/wp\/v2\/tags?post=12533"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}