Service charge

service charge: restaurants cannot add service charge automatically: government, CFO News, ETCFO

New guidelines issued by the Central Consumer Protection Authority (CCPA) state that restaurants cannot charge consumers a service fee by default.

“No hotel or restaurant should force a consumer to pay a service charge and should clearly inform the consumer that the service charge is voluntary, optional and at the discretion of the consumer. No restrictions on entry or provision of services based on charging service fees will be imposed on consumers. The service charge will not be collected by adding it to the food bill and levying GST on the total amount,” a GDP statement said Monday.

This means that restaurants must now clearly state that the service charge they apply is entirely voluntary and can be deducted from the bill if the consumer requests it.

It comes against the backdrop of Union Minister Piyush Goyal’s comments last month where he said service charges are being used to mislead consumers. “We cannot mislead people by charging for the service,” Goyal said.

Consumers can lodge complaints against any breaches of these guidelines by calling the National Consumer Helpline (NCH) 1915 or via the NCH mobile app, the government said.

The CCPA was established in 2020 to prevent unfair trade practices and misleading advertising in the country. It was created under section 10(1) of the Consumer Protection Act 2019.