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Service Charge By Restaurants Illegal, Says Govt

By Lokmat English Desk | Updated: June 2, 2022 20:26 IST

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The Ministry of Consumer Affairs on Thursday told restaurants not to levy 'service charge' on bills, dubbing the move 'illegal'.
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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.
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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.
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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.
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'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.
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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.
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Shetty added that it is a common practice by even other service providers that charge certain ‘convenience fee’ for providing services to customers.
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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.
Tags: Service Charge By Restaurants
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