New Delhi, June 9: The finance ministry today said restaurants without air-conditioning facility would not charge service tax from customers, while those with ACs would charge tax on 40 per cent of the bill amount.

"Restaurants, eating joints or messes, which do not have the facility of air-conditioning or central-heating in any part of the establishment are exempt from service tax. In other words, only air-conditioned or air-heated restaurants are required to pay service tax," the ministry said in a clarification.

In case of air-conditioned or air-heated restaurants, 60 per cent of the value is to be deducted from the total amount charged while applying the rate of service tax, which will be calculated on the balance 40 per cent, it said.

Following the increase in service tax to 14 per cent from June, the effective rate will be 5.6 per cent of the total amount charged.

Earlier, when the service tax was 12.36 per cent (including education cess), the effective rate was 4.94 per cent.

Officials said this implied that on a bill of Rs 1,000 at an AC restaurant, the service tax would be Rs 56.

In his budget speech, finance minister Arun Jaitley had said to facilitate a smooth transition to levy tax on services by both the Centre and the states, "it is proposed to increase the present rate" of service tax plus education cess from 12.36 per cent to a consolidated rate of 14 per cent.

Service tax is levied on all services, expect a small negative list.

After the increase in the rate of the tax, some of the key services that have become costlier include the railways, airlines, banking, insurance, advertising, architecture, construction, credit cards, event management and tour operators.