National / World

Service charge not mandatory; govt issues guidelines


New Delhi, Apr 21 (PTI): Service charge on hotel and restaurant bills is "totally voluntary" and not mandatory, Food and Consumer Affairs Minister Ram Vilas Paswan said today after the government approved guidelines on service charge.
 
Hotels and restaurants will not decide on service charge to be levied but it will be at a customer's discretion, the minister said, adding that these guidelines will be sent to states for necessary action.
 
"The government has approved guidelines on service charge. As per the guidelines, service charge is totally voluntary and not mandatory now," Paswan said in a tweet.
 
"Hotels/restaurants should not decide how much service charge is to be paid by the customer and it should be left to the discretion of customer," he added.

"Guidelines are being sent to states for necessary action at their ends," the minister tweeted.
 
As per the guidelines, the column of service charge in a bill will be left blank to customers to fill up before making the final payment.
 
"If there is mandatory levy of service charge, customers can file a complaint in the Consumer Court," a senior Consumer Affairs Ministry official told PTI.
 
Hefty fines and stringent action against violation cannot be taken at present as the current Consumer Protection Law does not empower the ministry to do so, the official said.
 
However, the new Consumer Protection Bill under which an authority will be set up will have powers to take action, the official added.
 
Last week, Paswan had said that the ministry has prepared an advisory on the service charge issue and the same was sent to the PMO for approval.
 
"Service charge does not exist. It is being wrongly charged. We have prepared an advisory on this issue. We have sent it to the PMO for approval," Paswan had said.
 
A number of complaints from consumers have been received that hotels and restaurants were charging 'service charge' in the range of 5-20 per cent, in lieu of tips, the ministry had said earlier.

Comment on this article

  • Dr Mohan Prabhu, LL.D, QC, Mangalore (Kankanady)/Ottawa, Canada

    Sat, Apr 22 2017

    If service charge on a hotel or restauarant bill is not mandatory it becomes a tip which is accountable for tax purposes; if left on the table in cash, it is pocketed by the waiter (perhaps shared with other waiters and manager), and it is up to each to declare it as taxable income. But there is no accounting, just an estimate that tax authorities go by. It i better to add to the bill, in which case if a tip is also left on the table, it becomes double d(t)ipping.

    DisAgree Agree Reply Report Abuse

  • Pinto, BLR

    Sat, Apr 22 2017

    If the service charge is removed, then why you keep a 'column' for service charges ? If anybody is happy with the service and wants to pay tips he can "add" there in the bill in his own handwriting if he is settling the bill by card. This is the normal practice worldwide if you want to settle the bill by card. If not people usually pay tips by cash. As simple as that.

    Why all these confusing circus ? Now it is just forcing clients to pay by keeping an extra column.

    DisAgree Agree [6] Reply Report Abuse

  • Rampa, Moon

    Fri, Apr 21 2017

    IF THIS IS THE CASE. IF WE ORDER GOLI BAJE. INSTEAD OF 5 IN ONE PLATE. THEY MIGHT GIVE 4 PIECES OF GOLI BAJE IN ONE PLATE.

    IF U ORDER CHICKEN BIRYANI. THEY MIGHT GIVE ONE PIECE OF CHICKEN INSTEAD OF TWO PIECES.

    SO DONT GET EXCITED.

    DisAgree [12] Agree [11] Reply Report Abuse

  • Rampa, Moon

    Fri, Apr 21 2017

    I WENT IN A RESTAURANT IN MOON.

    I ASKED HOW MUCH FOR IDLI VADA. THEY TOLD 5 MIA. IN MOON FOR RS IS MIA.

    AND I ASKED FOR CHUTNEY. THEY TOLD. CHUTNEY IS FREE.

    THEN I ASKED THEM TO PARCEL 5 KG CHUTNEY. DIDNT ORDER IDLI WADA

    DisAgree [1] Agree [7] Reply Report Abuse

  • Ruchir Agarwal, mangalore

    Fri, Apr 21 2017

    If any restaurant puts service charge ..then one need not give any tips. Now the law says the service charge column will be left blank and the customer can pay what so ewer he wishes.

    DisAgree Agree [13] Reply Report Abuse

  • Rampa, Moon

    Fri, Apr 21 2017

    MAKE IT FOR INCOME TAX ALSO. LET INDIVIDUAL DECIDE HOW MUCH TO THE TAX.

    GOVT SHOULD NOT DECIDE.

    DisAgree [7] Agree [15] Reply Report Abuse

  • Rampa, Moon

    Fri, Apr 21 2017

    CUSTOMER DECIDES. SOME CUSTOMER ALREADY PAYING TIPS. THEN WHY THIS SERVICE CHARGE.

    NOW SERVICE CHARGE WILL BE LIKE TIPS.

    DisAgree [2] Agree [12] Reply Report Abuse

  • sri, Karkala

    Fri, Apr 21 2017

    Acche din means same thing.
    No service charges

    DisAgree [10] Agree [3] Reply Report Abuse

  • J.F.D SOUZA, Attavar, Mangaluru

    Fri, Apr 21 2017

    One cannot term it a service charge. If that is so they can charge this increasing the cost of items. but we always give TIPS to the server for his good service. So service charges should not be made mandatory.

    DisAgree [1] Agree [6] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Fri, Apr 21 2017

    In India we call it "Tip" ...

    DisAgree [3] Agree [8] Reply Report Abuse

  • Evans Christopher Sumitra, Udupi/ New York, USA.

    Fri, Apr 21 2017

    That's good news.

    DisAgree [4] Agree [12] Reply Report Abuse

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