Central government makes service charge optional at hotels, restaurants

The government gave the order on a number of complaints from consumers after hotels and restaurants were following the practice of charging "service charge" in the range of 5-20 per cent, instead of a tip, the statement said

Central government makes service charge optional at hotels, restaurants

The Central government on Monday issued a statement saying that hotels, restaurants and companies cannot charge "service charges" as part of various taxes that is added to the final bill to consumers.

The statement lays out options for the consumers to pay or not to pay the service charge.

The government gave the order on a number of complaints from consumers after hotels and restaurants were following the practice of charging "service charge" in the range of 5-20 per cent, instead of a tip, the statement said.


"In this context, the department of Consumer Affairs, Central Government has called for clarification from the Hotel Association of India, which have replied that the service charge is completely discretionary and should a customer be dissatisfied with the dining experience he/she can have it waived off. Therefore, it is deemed to be accepted voluntarily," the government release said.

The Department of Consumer Affairs has asked the state governments to sensitize the companies, hotels and restaurants in the states regarding aforementioned provisions of the Consumer Protection Act, 1986 and also to advise the Hotels/Restaurants to disseminate information through display at the appropriate place in the hotels/restaurants that the 'service charges" are discretionary/ voluntary and a consumer dissatisfied with the services can have it waived off, the release added.