Good news for foodies this New Year. Hotels and restaurants can no longer ask you to pay hefty 5-20 per cent service charges on food bills. In what is seen as a victory for consumers, the government has sought clarification, saying that hotels and restaurants cannot compel people to shell out service charge for food and beverages.
Thus far, a host of charges would be levied on consumers, including a service charge of 5-20 per cent in lieu of tips. In any given situation, if for example your initial food bill comes to Rs 1,715 in a restaurant, you are levied the following charges that inflates the bill to Rs 2,241: Service charge — 10 per cent; VAT — 12.5 per cent; VAT — 20 per cent, service tax: 5.8 per cent; Swachh Bharat cess: 0.2 per cent and Krishi Kalyan cess: 0.2 per cent. Hence you end you paying over Rs 526 on just sundry charges. However, hoteliers have a different view. Riyaaz Amlani of Impresario Foods claims service charge is legal and the notification, is merely asking food chains to sensitise customers.
“Service charge is accountable and restaurants and hotels use this money to pay the staff. If you don’t like our service, you are free to go elsewhere. The notification is not studied properly. The Supreme Court has its judgment and we shall follow the SC on service charges,” he said.
Another top hotelier on condition of anonymity, explained: “It’s a normal practice across the world and legitimate too. Either tip or pay a service charge. This is meant for the staff. Their salaries are not good enough. In the US people pay 15-20 of the bill as a tip. India has a non-tipping culture. If you don’t want to pay in my restaurant I shall not force, but I would say it is basic courtesy. If the service or food is bad we waive off bills too. I can easily revoke this charge and add it on the food price. The same goes for others”.
The government has come down heavily on quick service restaurants and hotels amid complaints from consumers on how they are being forced to pay service charge in lieu of tips, irrespective of the kind of service provided to them.
The government has said that a consumer can now refuse to pay if not satisfied with their experience.
The Consumer Protection Act, 1986 states that if any trade practice for promoting sale, use or the supply of any goods or for any service, adopts any unfair method or deceptive practice, it is to be treated as an unfair trade practice and that a consumer can make a complaint to the appropriate consumer forum established under the Act against such unfair trade practices.
Thus far, a host of charges would be levied on consumers, including a service charge of 5-20 per cent in lieu of tips. In any given situation, if for example your initial food bill comes to Rs 1,715 in a restaurant, you are levied the following charges that inflates the bill to Rs 2,241: Service charge — 10 per cent; VAT — 12.5 per cent; VAT — 20 per cent, service tax: 5.8 per cent; Swachh Bharat cess: 0.2 per cent and Krishi Kalyan cess: 0.2 per cent. Hence you end you paying over Rs 526 on just sundry charges. However, hoteliers have a different view. Riyaaz Amlani of Impresario Foods claims service charge is legal and the notification, is merely asking food chains to sensitise customers.
“Service charge is accountable and restaurants and hotels use this money to pay the staff. If you don’t like our service, you are free to go elsewhere. The notification is not studied properly. The Supreme Court has its judgment and we shall follow the SC on service charges,” he said.
Another top hotelier on condition of anonymity, explained: “It’s a normal practice across the world and legitimate too. Either tip or pay a service charge. This is meant for the staff. Their salaries are not good enough. In the US people pay 15-20 of the bill as a tip. India has a non-tipping culture. If you don’t want to pay in my restaurant I shall not force, but I would say it is basic courtesy. If the service or food is bad we waive off bills too. I can easily revoke this charge and add it on the food price. The same goes for others”.
The government has come down heavily on quick service restaurants and hotels amid complaints from consumers on how they are being forced to pay service charge in lieu of tips, irrespective of the kind of service provided to them.
The government has said that a consumer can now refuse to pay if not satisfied with their experience.
The Consumer Protection Act, 1986 states that if any trade practice for promoting sale, use or the supply of any goods or for any service, adopts any unfair method or deceptive practice, it is to be treated as an unfair trade practice and that a consumer can make a complaint to the appropriate consumer forum established under the Act against such unfair trade practices.
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