The government has approved guidelines for hotels and restaurants about the service charge they impose on customers. Food and Consumer Affairs Minister Ram Vilas Paswan on Friday said the instructions will soon be forwarded to state governments for “necessary action at their ends”, reported ANI.
He reminded the public once again that the service charge component in the bill is “totally voluntary and not mandatory”. Paswan said establishments must not decide how much to charge a customer for services, instead that it should be left to the discretion of the recipient of the services.
On April 14, Paswan had said that the Centre wasin the process of formulating guidelines about service charge imposed by hotels and restaurants. “Service charge does not exist. [Money] is wrongly charged as [service charge],” he had said. “We have prepared an advisory on this issue and have sent it to the Prime Minister’s Office for approval.” The Union minister had said that levying service charge without a customer’s consent would be considered an unfair trade practice under the Consumer Protection Act. Paswan had also clarified that the service charge was not a tax, but a tip.
In January this year, too, the Centre had said that paying service charge was optional. In a notification to state governments, the department had directed local administrations to “advise hotels and restaurants to display information” stating that service charges were voluntary. The statement had also said that consumers had the right to refrain from paying the charge if they were not satisfied with the service.
The National Restaurant Association of India had, however, reacted sharply to the development. In a statement, they had said that that customers were free not to eat at a restaurant if they did not wish to pay the service charge levied by it. The group represents “Independent & Chain Restaurant/Bars/Café Owners and Operators of India”, according to their website.