VAT, Luxury Tax & Service Tax on Hotel & Restaurant industry
All of us use the services of Hotels and restaurant for stay, meetings, party, get together etc. It is generally been observed that the ultimate payment made by us is much higher than the prices mentioned on the menu list or tariff charts. The difference arises because of 4 major heads:
1) Service Charges
3) VAT (Value added Tax) and
In this article we will discuss in detail about each head separately.
1) Service Charges
Generally service charges are applied in case of restaurant or hotel food bill (and not on stay charges i.e room rent). It is a non-statutory charge. Many a time this service charges is assumed to be as part of service tax which is not so. Service charges is a kind of tip which is charged by the restaurant or hotel and it normally ranges from 0% to 10% (In some cases it may be even higher and is purely discretionary on the part of service provider).
The service tax and VAT is applicable on service charges as well.
It is applicable on stay charges (i.e Room Rent) and is not applicable on food charges.
Luxury tax is statutory in nature and is applied by the different states on the stay charges (i.e Room Rent). It varies from state to state. The Luxury tax rate for some of the states are as below:
Do we file taxes on income for caring for Mom?
I just found this site today and feel alot of relief in finding so many other people in the same boat as I am. Since moving in with my mom and taking care of her, she gives me money to help with my expenses, I had to resign from my job to take full time care of her. My question, do I have to record what she gives me and file income tax on this? I don't need more stress worring about getting into some trouble with the IRS. Thanks to anyone out there that may know the answer and can help me.
It’s understandable that you worry about the IRS coming after you: It is widely known to be a diligent and threatening agent in chasing down funds—and getting them.
A couple taxing thoughts come immediately to mind. Your mother can give you $12,000 per year, free of any gift tax, but the costs of living being what they are, that might not get you too far. Another possibility would be for your mother to pay you as a household employee. A W-2 would need to be issued and she would be paying some employment-related taxes.
Although the IRS widely has the reputation as being formidable and confounding—and there are stories to prove it’s earned it, it does print a number of consumer publications that are refreshingly straightforward and easy to read. You can find those that best fit your situation at www.irs.gov/publications/p524/index.html .
Once fortified by that information, however, I would urge you to consult a local reputable tax expert or financial planner. And this is not passing the buck as much as is may sound. It’s just that you—and your mom—are now pinned in a precarious place financially. Best to get someone to eyeball both your financial stances—and the IRS returns you’ve filed for the last few years—and figure out how to go down the path more sanely together.
The best steps for you to take depend on many things: whether she owns her home, when and whether she might qualify for Medicaid or other government programs, how you and she both hold valuable property, such as a home or large bank or savings account.
Finding the best expert financial planner, especially one versed in elder affairs, may take a bit of sleuthwork. If you have a friend or acquaintance who has had a good experience with such a soul, that’s a good place to start. Other possibilities for referrals: local senior centers, your local Department on Aging, a CPA or attorney you have come to know and trust.