Government approves Guidelines on service charge

Ministry of Food and Consumer Affairs has approved the Guidelines on Fair Trade Practices Regarding Charging of Service Charge from Consumers by Hotels and Restaurants. To many drug-related charges the policies which may be issued in public areas interest in order to safeguard the rights of shoppers, the government has stated that Service charge on hotel and restaurant bills is “totally voluntary”, adding that mandatory levy of service charge amounts to unfair trade practice.

Much like the policies, Hotels and restaurants cannot go for service charge and therefore the column of service charge will remain blank in the check for 100 % free to extra service before you make payment.

The guidelines have in addition stated that in an instance of mandatory levy of service charge, customers can file a complaint on the Consumer Court. However, now, stringent action cannot be studied about the erring hotels being the current Consumer Protection Act, 1986 fails to empower the ministry to complete so. But, within the new Consumer Protection Bill, an authority is anticipated to be set track of powers to have such actions.

Rationale

Department of Consumer Affairs has justified the policies in view of complaints received by it from consumers that some hotels are insisting payment of service charge in garden of 5-20 % and many persons are paying it believing to be element of taxes.

Much like the policies, a component of service is already inherent on the provision of food and beverages ordered by the customer. Hence, the buying price of food and beverages is anticipated to cover both goods and service components.

HRAWI's Response

The Hotel and Restaurant Association of Western India (HRAWI) haven't welcomed the policies by stating that levying of service charge may be a global practice and the best tax, adding that it will be in India for upwards of half a century. They have accused the government of singling away sector as hospitality sector as well as companies are levying such charges.

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