Govt has clarified that the “service charge” is optional and customers can refuse to pay that if they feel like.
For some years, most of the restaurants and hotels have started charging “Service Charge” along with the other taxes in their bills and us customers due to lack of understanding feel obligated to pay it.
However, the govt has issued a notification today which clearly mentions that if the customer is not satisfied with the experience at the hotel or restaurant, they can choose to not pay it. Below is the video clip of this news
Govt Notification
“A number of complaints from consumers have been received that hotels and restaurants are following the practice of charging ‘service charge’ in the range of 5-20%, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him,” the ministry said in the notification below
Note that the Hotel Association of India has themselves clarified this point.
Why do restaurants charge “Service Charge”?
For those who don’t know this, the service charge was mainly introduced to replace the tips given to the workers (waiters etc), so instead of your giving the tips, the restaurants charge a fixed charge (5% – 20%) and its distribution among the employees.
However, there is no strong proof that most of the restaurant owners actually distribute it among employees. Also irrespective of the service and experience, the customers pay this service charge.
But now after this clarification has come, you can freely tell the restaurant that you will not pay this charge if you didn’t have a good experience at the hotel or restaurant.
An important point to Note
- Service Charge goes to restaurant kitty
- Service tax goes to Govt
- Service Charge can be added to the bill only if its mentioned in the menu
- Service charge is not mandatory to be paid if you don’t want to pay it
What are your views about this topic and notification?