As the government has said it will soon come up with a robust framework with regard to the service charge levied by restaurants and hotels, restaurants are saying the service charge is still very much legal until the final disposal. The National Restaurant Association of India (NRAI) has said the consumer affairs ministry has heard the views of all stakeholders and will review all inputs before deciding on the matter. Here’s what taxes and charges you pay on a restaurant bill:
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Break-Up Of A Restaurant Bill
The overall bill of a restaurant comprises the price of food and beverages, goods and services tax (GST) and service charge. Bills in restaurants, including restaurants within a hotel where room tariff is less than Rs 7,500, attract 5 per cent GST without input tax credit (ITC). However, if a restaurant is within a hotel where room tariff is more than or equal to Rs 7,500, the GST rate will be 18 per cent with input tax credit.
Apart from this, restaurants also levy a service charge that ranges from 5 per cent to 10 per cent. The service charge has become a matter of discussion with the consumer affairs ministry calling a meeting with restaurant bodies after complaints from customers and discussing the legality of the charge.
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Service Charge: What Govt And Restaurants Say
Following complaints from consumers, the ministry had scheduled a meeting on June 2 with the National Restaurant Association of India (NRAI) to discuss the issues pertaining to service charges levied by restaurants. Restaurants usually charge a 10 per cent service charge over the total bill.
The consumer affairs ministry has called the service charge levied by restaurants illegal and asked the NRAI to immediately stop the practice. It also said levying the service charge is adversely impacting consumers, sources told CNBC-TV18.
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The consumer affairs ministry said it will soon come up with a robust framework with regard to the service charge levied by restaurants and hotels. However, the NRAI has said the ministry heard views of all stakeholders and will review all inputs before deciding on the matter and until the final disposal, the service charge is still very much legal.
“Media reports regarding decision allegedly taken at Department of Consumer Affairs meet today with respect to the legality of service charge are untrue. Department heard views of all stakeholders and will review all inputs before deciding on the matter. Until final disposal, service charge is still very much legal,” the NRAI said in a tweet.
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According to an official statement by the consumer affairs department, “During the meeting, major issues raised by the consumers on National Consumer Helpline of DoCA relating to service charge such as compulsory levy of service charge, adding the charge by default without express consent of consumer, suppressing that such charge is optional and voluntary and embarrassing consumers if they resist paying such charge etc. were discussed. Further, guidelines on fair trade practices related to charging of service charge by hotels/restaurants dated 21.04.2017 published by DoCA were also referred to.”
