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emfizz.com April 25, 2017


Service charge in hotels, restaurants not mandatory

22 April 2017, 01:06 | Jan Cross

Food and Consumer Affairs Minister Ram Vilas Paswan

Food and Consumer Affairs Minister Ram Vilas Paswan

Announcing the new guidelines, Union Consumer Affairs Minister Ram Vilas Paswan said that the new guidelines have been approved by Prime Minister Narendra Modi's office and these are being sent to respective state governments for implementation.

Approving the guidelines on service charge, the Centre on Friday announced that service charge is completely voluntary and not mandatory.

According to an official from the Consumer Affairs Ministry, hotels can not levy service charge in the bill and it will be the customer's discretion weather to pay or not.

"A customer patronises a food outlet with the full knowledge that he or she will be levied a service charge". The state governments were instructed to ensure restaurant owners inform their customers about service charge not being mandatory.

The guidelines in service charge, issued by the Consumer Affairs Ministry, state that restaurant may leave the service charge column of the bill blank for the customer to fill up before making payment. "Govt has approved guidelines on Service Charge".

Hotel and restaurant associations, however, were unhappy with the guidelines. The present statement is causing unnecessary confusion among the public, adversely affecting restaurants.

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The guidelines make it clear that service charge, tip or gratuity is a "separate transaction between the customer and the staff of the hotel or restaurant, which is entered into, at the customer's discretion".

Many consumer rights groups have been filing complaints with the government to end this unfair practice.

"Our Department's view is that imposing service charge is an unfair trade practice and consumers need not pay".

A new consumer protection bill is in the works and it may resolve the issue of whether service charge is an unfair practice.

Last week, Paswan had said the ministry had prepared an advisory on the service charge issue and the same was sent to the PMO for approval. The charge is neither hidden nor disguised.

Riyaaz Amlani, President, National Restaurant Association of India, said: "Guidelines are not laws". "All employees are beneficiaries of service charge, not just waiters but also cooks, toilet attendants and cleaners. We can not understand why we are being singled out".



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