You Can't Be Forced To Pay Service Charge At Restaurants Anymore

The Central Consumer Protection Authority (CCPA) which comes under the Ministry of Consumer Affairs has said that hotels and restaurants will be barred from levying service charges. Customers will also be able to file complaints in case of violation. By Karan Kaushik

Restaurants barred from levying service charges; here’s what it means for diners

In the last few weeks, there’s been a lot of debate around the service charge levied at restaurants. Service charges adversely affect consumers on a daily basis – at times it results in them having to shell out more than they wanted to pay when the service they received wasn’t up to mark.

While the National Restaurant Association of India (NRAI) has maintained that restaurants have the right to levy service charges, the government-led CCPA has rolled out fresh guidelines to prevent restaurants from doing so.

What is a service charge?

A service charge could be described as a tip that is indirectly collected by the restaurant from the customer and is a part of the bill. It is 10 to 15 percent of the bill before taxes. This charge is proportionally distributed among the staff up to the supervisory level. The thought behind taking a service charge is to compensate for the traditionally low salaries of waiters, bartenders, and other staffers.

The CCPA has always maintained that it should be up to the customers whether or not they wish to pay a tip or service charge and it should not be mandatory.

New guidelines by the CCPA

Safeguarding Consumer Rights!

In a bid to protect consumers from unfair charges, hotels & restaurants can no longer levy service charge automatically or by default in the food bill.

📖 https://t.co/cC7Dvf8Elk pic.twitter.com/7kEbmefrSF

— Piyush Goyal (@PiyushGoyal) July 4, 2022

This is what the latest guidelines issued by the CCPA state:

1. Hotels or restaurants shall not add a service charge automatically or by default to the food bill.
2. Hotels or restaurants shall not collect these charges from consumers in any other name.
3. Customers can’t be forced by hotels or restaurants to pay the service charge. In fact, they should inform the consumer that the charge is voluntary, optional, and at the consumer’s discretion.
4. Hotels or restaurants can’t restrict consumers from entering or deny them services based on the collection of service charges.
5. No hotel or restaurant should collect the charges by adding them to the food bill and levying GST on the total amount.

Here’s what diners can do

If diners are forced to pay the charge against their wish, this is what they can do:

1. They can request the hotel or restaurant to remove the service charge from their bill.
2. They can lodge a complaint against the concerned hotel or restaurant on the National Consumer Helpline (NCH) by calling 1915 or through the NCH mobile app.
3. They can even register a complaint against unfair trade practices with the Consumer Commission. This can be done through the e-daakhil portal.
4. And finally, the customer can also make a complaint to the District Collector of the concerned district for investigation and subsequent proceeding by the CCPA. They will have to email a copy of this complaint to the CCPA at com-ccpa@nic.in

Related: What The Service Charge At Restaurants Means For Diners And Restaurateurs

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