Health

Service charges in restaurants: all you need to know about the ongoing debate

May 27, 2022
Bharat Times

After two long years of the pandemic, eating out has become a truly cherished experience. The wait to go and visit our favorite restaurants for fresh food on our plates straight from the kitchen is finally over. Lately, however, the food is proving to be extremely expensive for the eaters. The aspect of service charges levied by restaurants has come under scrutiny recently. The Ministry of Consumer Affairs has pointed out that restaurants are levying service charges as the default billing option, even though it is completely voluntary and its collection is not mandated by law. However, the National Restaurant Association of India (NRAI) had a different opinion on the issue. Read on to know all about this ongoing debate.

Can restaurants levy service charges? what the ministry says

Rohit Kumar Singh, Secretary, Ministry of Consumer Affairs, Food and Public Distribution, wrote to the NRAI Chairman citing consumer complaints on the National Consumer Helpline (NCH). The department has called a meeting on 2nd June 2022 to discuss the issue. NRAI, The ministry says that almost all restaurants charge service charges in the range of 5-15% and have made it practically mandatory. It is different from Goods and Services Tax or GST which is collected by the government and is like a tip. This default billing option is not mandated by law and is entirely at the discretion of the restaurant. However, restaurants do not disclose that this fee is voluntary and charge most consumers a service fee unless they specifically ask to remove it.

Thus, it is the responsibility of the consumer to be informed and aware, and to refuse to pay the fee in case of poor service. In some cases, restaurants even harass customers for not paying service charges. In some establishments the service charge is also levied in the form of some other fee or charges. Further, according to the ministry, the distribution of service charges among restaurant employees is not clear. All these matters will be discussed in the meeting to be held on June 2.

(Also read: What is the difference between service tax and service charge?,

“It’s a matter of restaurant policy,” says National Restaurant Association of India (NRAI)

NRAI responded to the letter in a statement on Tuesday, May 24, 2022. He said that this matter had come to the fore. 2016-17 Also, and NRAI had provided its response to the Govt. “There is nothing new in this which the department has mentioned in its letter for the meeting to be held on June 2,” the statement said.

As per NRAI, the service charge to be levied is a matter of restaurant policy which the establishment can decide on its own. “It is a matter of individual policy to decide whether to charge a service fee by a restaurant or not. There is no illegality in levying such a fee,” he said.

He further added that the consumer is made well informed about the amount of service charge before placing the order. “The information regarding the amount of service charge is mentioned/displayed by the restaurant on their menu card and otherwise also displayed on the premises, so that the customers are well aware of this charge before availing the services Once the customer is made aware of such charges in advance and then decides to place the order, it becomes an agreement between the parties and is not an unfair trade practice. The said fee to the Govt. But GST is also paid,” NRAI Having said,

Twitter reacts to service fee debate ahead of June 2 meeting

Several Twitter users also shared their reactions to the ongoing debate. While some were of the opinion that it was a fair allegation, others begged to differ.

Take a look at the responses:

The final decision regarding the service charge will be taken soon in the meeting of June 2. What do you think about this debate about service charge? Should the restaurant levy this fee or leave it to the consumer? Tell us your thoughts in the comments below.