Service Charge By Restaurants Illegal, Says Govt
By Lokmat English Desk | Published: June 2, 2022 08:26 PM2022-06-02T20:26:47+5:302022-06-02T20:26:47+5:30
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The Ministry of Consumer Affairs on Thursday told restaurants not to levy 'service charge' on bills, dubbing the move 'illegal'.
The ministry said it will soon formulate a legal framework, that among other things, will prevent hospitality establishments from levying the charge. The move is being planned to protect the interests of consumers.
The Department of Consumer Affairs (DoCA) called the hospitality industry association Federation of Hotel & Restaurant Associations of India (FHRAI) for a meeting on Thursday to discuss the matter of service charge on restaurant bills.
FHRAI in a clarification earlier said service charge known colloquially as ’tip’ is the amount paid to the staff of the restaurant or other similar establishments by patrons.
"Service charge is considered a beneficial payment since it is meant for the benefit of the staff of the establishment. So, some establishments make a conscious choice to adopt a beneficial policy towards its staff members by assuring them a minimum tip which is a percentage of the rest of the charges. There is nothing illegal nor is it in violation of the law for restaurants to collect a service charge,” Gurbaxish Singh Kohli, Vice President, FHRAI had said in a statement earlier.
FHRAI’s joint honorary secretary Pradeep Shetty said that it is entirely a restaurant’s discretion whether to charge service charge or not. If a guest has any objection to paying the service charge, then, it can be removed from the bill.
Shetty added that it is a common practice by even other service providers that charge certain ‘convenience fee’ for providing services to customers.
Services like train and air ticket booking through websites or portals, food ordered via website or mobile apps, or movie tickets booked through online portals all levy a convenience fee on the customers.