January 3, 2017: You can refuse to pay the service charge on your restaurant or cafÃ© bill if unhappy with the food or experience, Indian Government said on Monday, clearing a debate on the compulsory tipping imposed on customers.
People have the right to decide whether or not to pay the charge and determine the amount in case they volunteer to give, guidelines issued by the consumer affairs ministry said.
Restaurants and hotels have to put up notices â€œat an appropriate placeâ€ on their premises that â€œservice charges are discretionaryâ€, according to the new norms.
There is no directive from tax authorities on the charge, which could vary anywhere between 5% and 20% of the billed amount. The money went directly to restaurants and hotels, though they were supposed to pass on the collection to their staff.
The charge has nothing to do with the government-levied service tax, which comes to 15% of the tab and goes to the public exchequer.
Eating out has already been expensive because of the service tax that includes a couple of welfare cesses. The additional service charge made restaurant food bills steeper, prompting complaints from patrons and a sustained campaign by consumer rights groups to do away with it.
The service charge collected in place of tips was levied without discretion â€” whether a patron liked the service or not, the groups argued.
The charge was not mandatory â€” and rampant â€” until a few years ago. But most eateries have adopted it now as part of their bill.
â€œOften, customers are not informed about the service charge and forced to pay an additional amount as a tip … This is illegal,â€ said Bejon Misra, the founder of Consumer Online Foundation.
The government too cited provisions in the Consumer Protection Act, 1986, to stop the compulsory charge.
â€œWe will review the decision. We have been levying a service charge and our guests preferred that because it stopped the practice of some staff member standing around for tips,â€ said Meena Bhatia, Le Meridien hotelâ€™s marketing and operations vice-president.