service charges

I wonder who’s managing the books at Pizza Hut. I haven’t seen any other food chain levy the myriad forms of charges and taxes that Pizza Hut does. You really need to carry much more cash than you think is necessary because here’s what happens after you’ve eaten:

  • You’re first billed a compulsory and fixed Service Charge at 10% of your bill amount. I assume that you need to pay this Service Charge even if the Chef burns your pizza and the Waiter then comes along and pours a whole jug of Pepsi on your head. I’d rather walk-up to the kitchen window, collect my food, and avoid the Service Charge. But that’s just my wishful thinking. And how on Earth did Pizza Hut arrive at this linear correlation between service and service charge?

  • You’re then billed VAT at 14% and that’s post the Service Charge. I don’t see what value is added in bringing food from the kitchen to your table. I’m OK with VAT on the food prepared (there’s some value added in converting the raw ingredients into their edible equivalents) but not on the service (unless the Waiter wears a costume and does a dance on the way to your table).

  • You’re then billed Service Tax at some-weird-percentage on God knows which line-item on the bill. See if you can figure this out from the sample bill (link below).

  • You’re then billed Cess at 2% on the Service Tax.

  • You’re finally billed Education Cess at 1% on the Service Tax. There you go! I just paid 8 paisa yesterday towards enhancing literacy levels in India.

Thankfully, the charges and taxes end here.

Click here to download an actual Pizza Hut bill.

Eat at Pizza Hut. Make India rich and literate. What else can I say?

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A random thought had me rummaging through my credit card statements for arriving at this conclusion:

HDFC_Platinum_Plus_Credit_Card

The fuel surcharge is indeed zero, but you’re still paying the service tax! A good reminder for what I’ve said before: Always check for service tax charges.

Does your credit card do the same?

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Don’t forget this — ever.

With the number of services being brought under the service tax net increasing continually, it’s good to keep the applicable service tax charges in mind when perusing a financial product or service offer.

For example:

Though your monthly cellular rental might be quoted as Rs 249, the actual rental is Rs 249 + 12.36% service tax = Rs 279.78. In general, the higher the bill, the higher the service tax charges.

Given human psychology, there’s good incentive for service providers to hide the service tax charges within fine print. It’s therefore prudent on your part to ask what the service charges are if you don’t find them published.

Tip Tuesdays is my new initiative to share practical personal finance tips — every Tuesday. I’d be delighted if you could share a tip or two from your own experiences. Drop a comment or use this form to submit your tip. And, as always, do spread the word if you find this useful.

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