Restaurant Service Charges: An Explainer If You Need Pay It Or Not

Imagine you are dining in a luxurious restaurant and suddenly they slap you with 10% service charges on the bill. It won’t be a pleasing experience in any way! Well, it was just an example. But many folks out there don’t have a single idea regarding the restaurant service charges.

Do you know it is completely optional to pay for it? It is up to you whether you want to pay an extra charge (as a tip) to the restaurant or not. But what will you do if the restaurant forcefully asks you to pay for it? Well, if you are not sure about the steps to be taken in such a situation then this article is perfect for you. We will thoroughly describe the restaurant service charges and also explain the steps that you can take when restaurants ask you to pay them. Let’s begin!

Restaurant Service Charges

First of all, it is important to know about the “Restaurant Service Charges.” If you observe the bill of a restaurant, you will notice that along with food and beverages, there is GST as well as service charges. They levy a service charge on the bill that reaches up to 5-10% of the payment. Also, in the year 2016- 17, the service charges reached up to 20%. Subsequently, the government issued a series of guidelines in the same year (2016-17) that declared the service charges as “Optional.” Sadly, that was not the end. The restaurants continued to levy the service charges by default without informing the customer. Also, there was no scope for escape in service charges in online payment systems like Paytm or PhonePe.

Complaints against Restaurant Service charges

Gradually with an increase in awareness, the customers opposed paying the service charges of restaurants. But, restaurants also played cunning tricks to outsmart customers. They put a notice at the entrance (which was not even noticeable) mentioning that one who enters the premises is liable to pay the service charges. As soon as the customer realized this trick, it was too late! 

Thus, they complained to the CCPA (Central Consumer Protection Authority). Eventually, it became a matter of concern because the number of complaints was unexpectedly high.

Guidelines against Restaurant Service Charges

Again in July 2022, the CCPA issued guidelines strictly prohibiting eateries or restaurants from levying service charges by default or by any other name. According to the guidelines, the eateries can include the GST (Goods and Services Tax) but in case if they levy any service charge, then it will be considered an unfair trade practice under Consumer Protection Act (CPA), 2019. However, if the customer wants to pay a tip as a sense of gratitude to the hospitality staff, then it won’t come under any kind of unfair practice.

CCPA issued the following guidelines to protect customer’s rights and to prevent any unfair practices in restaurants-

• The hotel or restaurant should not add the service charge by default on the food bill.
• They should not collect the service charges from customers by any other name or by any cunning tricks.
• Service charges are voluntary and optional, hence, levying them forcefully on customers will be considered an unfair practice.
• The hotels or restaurants cannot prevent the entry of customers or restrict any services based on service charges.

What to do when the restaurant asks you (or forces you) to pay service charges?

In case a hotel or restaurant violates the guidelines and forces you to pay the service charges then you can take the following remedies-

• The first step you can take is to ask the establishment to remove the levied charge from the billing amount.
• You can call 1915 or the National Consumer Helpline (NCH) app to complain about the restaurant.
•  If your complaint is still unresolved then you can file a complaint with the Consumer Commission against the unfair trade practices. You can also file the complaint electronically through the e-daakhil portal.
• You can also submit the complaint to the District Collector of your region.
• You can write your complaint to CCPA on their official website.

Aftermath

If you can present enough evidence to CCPA about the violation under section 20 of the Consumer Protection Act, then the govt. an entity can pass the following orders-

• Refund you the unfair charges.
• To discontinue unfair practices that are detrimental to consumer interest.

Wrap Up

Now we hope you are sufficiently aware of the guidelines set up by the government authority regarding restaurant service charges. From next time onwards, ensure to check for the presence of unwanted restaurant service charges in your food bill. In case, if you find one, then you can follow the above steps to tackle the situation.