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Government vs restaurants: Here’s the entire scoop on service charge!

By Newsd
Updated on :

A fresh announcement by the government related to the service charge in restaurants has shook the entire food industry. On 2nd January this year, the government announced that service charge is entirely optional and consumers can refuse to pay if not happy with the services or if don’t feel like paying the same. Precisely, the hotels and restaurant cannot force people to pay it as this forceful inclusion in the bill violates fair trade practices, believes the Department of Consumer Affairs.

What is service charge?

Now you must be wondering what is service charge. Well, let me tell you it’s not a service tax that is mandatory. In fact, it is in addition to the service tax and other taxes levied on your bill in restaurants or when you dine out. This usually ranges from 5%-20%, depending on the place you are dining particularly. It is precisely the forced tipping as the service charge is meant to be dispersed amongst the staff.

What is Government’s take on it?

As per the Government, such charges should not be obligatory and if service is not satisfactory, consumers can ask for the service charge to be waived off. “The Department of Consumer Affairs has asked the State Governments to sensitize the companies, hotels and restaurants in the states regarding aforementioned provisions of the Consumer Protection Act, 1986 and also to advise the Hotels/Restaurants to disseminate information through display at the appropriate place in the hotels/restaurants that the ‘service charges” are discretionary/ voluntary and a consumer dissatisfied with the services can have it waived off.”

What restaurants have to say

The declaration on the service charge by the government attracted quick response from NRAI (National Restaurant Association of India). “It is a matter of policy for a restaurant to decide if the service charge is to be levied or not,” it said adding that the service charge being levied by restaurant must be mentioned clearly in the menu so that the consumer can decide whether to eat there or not.

Some restaurateur thinks that rather than looking at service charge, the administration should be lessening the taxes, which is essential to pay. They feel the growing business such as Food and Beverage needs government backing so that they can deal with luxurious and a highly competitive market.

As per a report in NDTV, Sahil Gupta, co-owner of Tabula Beach, The Hungry Monkey and Arriba, said, “The reason why we have service charge in India is because tipping is not part of our culture. In most other countries, if a diner doesn’t tip, it is frowned upon, whereas in India, people rarely voluntarily tip. We believe that if a customer is not happy with her/his service, they have every right to pay a lower amount towards service charge. We will even be happy to remove service charge from a bill if a customer requests. However, diners should be cognizant of the fact that staff deserves extra appreciation for the work they put in.”


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