“Service Charge” is not compulsory at Hotel and Restaurants : Food and Consumer Affairs Ministry

Admin | Update: 21/04/2017

 Its become notice that Some of Hotel’s and Restaurant are charging Tips/Gratuities from the Customers without their express consent in the name of “Service Charges” , Hence The Food and Consumer Affairs Ministry had loudly said that Service Charges on Hotel and Restaurant bill is totally voluntary and not mandatory.

         Even paying Service charges, is completely decided by customer only and Hotel and Restaurants should not decide the amount of service charge.

         The Department of consumer Affair, Government of India is mandated to ensure that consumers are protected as per the provisions of the Consumer Protection Act, 1986.

         Whereas, it has come to the notice that in some customers are paying Tips to waiter in addition to service charges under the mistaken impression that service charge is part of Taxes and few time its presented as part of Taxes by Restaurants and Hotels.

          Whereas, Public interest has arisen due to a number of grievances reported against mandatory levy of service charges by Hotel and Restaurants.

           Now therefore, the Government considers it appropriate to clearly distinguish between the fair and unfair trade practices in respective of Service Charges and issue the following guidelines.

1) Pricing of the product ordered from the hotel should cover both the goods and service components.

2) Hotels cannot restrict entry of any customer for non-payment of service charge.

3) Placing of an order by a customer only means he agreed to pay the prices displayed on the menu card with taxes and nothing more.

4) Charging anything more in the name of ‘service charge’ would amount to unfair trade practice.

5) Tips paid by a customer is a separate transaction between him and the hotel staff, and solely a discretion to be exercised by the customer.

6) Bill presented to customer may clearly display that service charge is voluntary and the service charge column of the bill may be left blank for the customer to fill up before making payment.

        If there is mandatory levy of service charge, customers can file a complaint in the consumer forums of respective Jurisdiction.

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