Restaurants barred from levying service charge by default in India

Service Tax in Hotels – India’s Consumer Protection Authority has banned hotels and restaurants from levying a service charge on bills by default. It comes after complaints of restaurants charging extra without informing their customers that they were doing so.

The new guidelines will bar restaurants from collecting tips under an alternate heading or deny service to customers for not paying the so-called service charge. In 2017, the Indian Consumer Affairs Department issued guidelines that said customers had only to pay prices displayed on the menu along with taxes and could use their discretion on whether or not to leave a tip.

Service Tax in Hotels

Some restaurants have continued to add a tip to the bill and left it up to patrons to contest the extra charge.

Meanwhile, the National Restaurant Association is defending the practice and says it is a matter of individual policy. They say service charges bring additional revenue to the government since restaurants pay tax on what they charge to customers.

 

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