First And Foremost: Don’t Confuse Service Charge With Service Tax
Service charge is a fee charged to you by the restaurant for waiting on you. It is not a tax. As a matter of fact, restaurants are free to charge any amount as there are no set rules or guidelines for this.
But it usually is equivalent to the tip you want to pay the waiter. Moreover, you were obligated to pay this regardless of being dissatisfied with the service or food. So, does that mean you will still have to pay service tax? YES!
This brings us to the next question – WHY? Well, Service Tax is paid to the Government. It is a 14% tax on 40% of your bill in addition to a service charge.
Story So Far
It all started yesterday with Consumer Affairs & Food Minister Ram Vilas Paswan’s tweet:
Restaruants are billing service charges in addition to taxes. Service charge is optional . Consumer has a discretion to pay or not.
— Ram Vilas Paswan (@irvpaswan) January 2, 2017
He aims to liberate the unhappy consumer from the shackles of service charges in addition to taxes.
BUT NRAI (National Restaurant Association of India) be like: “Don’t eat if you don’t want to pay!”
On the other hand, NRAI President Riyaaz Amlani said: “As long as service charge is mentioned prominently in the menu, it cannot be termed as unfair or defective practice”.
Next, they (NRAI), have not only cited judicial precedent over this but also issued a statement implying how serious they are about their take on this.
If The Judicial Precedence Overrules The NRAI
You are not obliged to pay this 5-20% Service Charge if:
1. You are not happy with the exceptionally slow service.
2. You got served but it wasn’t what you ordered.
3. Nobody attended you for a long time.
4. The hygiene factor was missing.
5. You had a bad dining service and they did nothing about it.
What are your thoughts on this? Do you agree with the NRAI? Do let me know in comments 🙂
Incase you want to start your own restaurant, read this! And here are some of The Best Indian Restaurants of 2016 In Mumbai
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