Government Makes Collection Of Service Charge At Restaurants Illegal

by Suchismita Pal
Government Makes Collection Of Service Charge At Restaurants Illegal

A large number of restaurants levy service charges on the final bill along with CGST and SGST. A few restaurants remove them when asked to, while a few others say that it is mandatory as per restaurant policy. For many eateries, it is written on the menu itself that x% of service charge will be levied on the final bill. Although the National Restaurant Association of India (NRAI) does not hold levying service charges unlawful, the Central Government has declared it to be illegal. Here’s everything to know.

Ministry Of Consumer Affairs Calls Service Charge Imposition An Illegal Practise

A recent press release of the government has stated that forcefully imposing service charges on the restaurant bill is ‘unjustified’ and accounts for a ‘restrictive trade practice’ under Consumer Protection Act. Ministry of Consumer Affairs has stated in its notification that levying service charges is an illegal practice. It has added that the Centre will soon take action to stop the imposition of service charges to protect the rights of the consumers. A meeting also took place with the restaurant associations after the Department of Consumer Affairs received a lot of complaints from customers regarding the tax.


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Government Orders NRAI To Stop The Service Charge Collection Practice At Restaurants

The NRAI has however made no objection to the practice of collecting service charges. In fact, NRAI has said that customers cannot refuse to pay the tax. The service charge is the amount of money the restaurant collects to pay the employees and workers. According to a Live Mint report, Vice President of the Federation of Hotel and Restaurant Associations of India (FHRAI), Gurbaxish Singh Kohli, has said that some restaurants make a conscious decision to levy service charges as they are beneficial for the employees. The Central Government has however ordered NRAI to stop the collection of service charges by restaurants. On that note, here are 5 Ways To Know If A Hotel Is Overcharging You So You Don’t End Up Paying Extra.