Tired of Paying Service Charge at Restaurants? Here’s How Govt Plans to End the Malpractice

The Ministry of Consumer Affairs is planning to bring the service charge earnings of all restaurants and hotels under the tax net.

In this regard, the Ministry has asked the Central Board of Direct Taxes (CBDT) to take into account the service charge component while assessing the tax liabilities of restaurants and hotels.

The move has been mulled in the wake of increasing complaints by consumers against restaurants and hotels that continue to levy service charge even after the Govt had issued a mandate warning all erring eateries to make service charge optional.

In a series of tweets, Minister Ram Vilas Paswan said, “In view of seriousness of the issue, Deptt. of Consumer Affairs has written to CBDT to consider inclusion of service charge while assessing tax.”

“Complaints against those insisting payment of service charge compulsorily are being received through NCH (National Consumer Helpline) and are being reported in media,” Paswan added.

In order to bypass the mandate, some restaurants and hotels have started mentioning at their entrance - “We levy service charge,” highlighting this issue, Paswan said, “Hotels/restaurants have been asked either to leave the column of Service Charge blank or mention on the Bill that it is optional.”

In April, the Consumer Affairs Ministry had made it very clear that levying service charge “amounts to an unfair trade practice.”