Service charge

Collecting ‘service charges’ is illegal: Government at restaurants

Charging ‘service fees’ is illegal: Government to restaurants

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New Delhi: The Department of Consumer Affairs told restaurants on Thursday not to levy a “service charge” on bills, calling the move “illegal”. The ministry said it will soon formulate a legal framework which, among other things, will prevent hotel establishments from collecting the levy. The move is planned to protect the interests of consumers.
The Department of Consumer Affairs (DoCA) convened the hospitality industry association Federation of Hotel and Restaurant Associations of India (FHRAI) on Thursday to discuss the issue of restaurant bills.

FHRAI in an earlier clarification said the service charge known colloquially as “tipping” is the amount paid to restaurant staff or other similar establishments by customers.

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“The service commission is considered as an advantageous payment since it is intended for the benefit of the personnel of the establishment. Thus, certain establishments make the conscious choice to adopt an advantageous policy towards its members of staff by assuring them a minimum tip which is a percentage of There is nothing illegal or violation of law for restaurants to collect service charges,” Gurbaxish Singh Kohli, FHRAI Vice Chairman, had said in a statement.

FHRAI Honorary Joint Secretary Pradeep Shetty said it was entirely up to the restaurant whether or not to charge a service fee. If a customer objects to payment of the service fee, it may be removed from the invoice.

Shetty added that this is standard practice even among other service providers who charge certain “convenience fees” for providing services to customers. Services such as booking train and air tickets through websites or portals, food ordered through a website or mobile apps, or movie tickets booked through online portals all charge convenience on customers.