The food bills include the price of the dishes, Goods & Services Tax (GST), and service charges. It is of course a mandate to pay the price of the dishes we ordered and the GST, but the service charges are raising a lot of questions and contracting judgments. Restaurants and cafes charge service charges of about 5%-10% of the food bills. According to the restaurants, adding a fair percent of service charges with the food bills is legal. However, the Union Ministry of Consumer Affairs stated that it is an ‘unfair trade practice’. The government is working to curate a framework for the restaurants to scrap the service charges from the food bills.
Break-Up Of Taxes and Charges Of Food Bills In India
We have to pay a GST of 5% included in our food bills if we are ordering from any restaurant or those restaurants nestled within a hotel. The input tax credit is not a mandate in this case. The GST increases to 18% if the restaurant is not only nestled within a hotel but also the room tariff needs to be more than ₹7,500. In this case, it will also include the input tax credit. With all these taxes and food costs, the restaurants also add service changes and this is now the buzz of the town. These service charges are in no way a mandate, but rather optional. Still, the restaurants pushed the customers to pay these optional charges even if the customers did not will to pay. Many customers have raised questions and made complaints about this decision of the restaurants. This led to a meeting between the consumer affairs ministry and restaurants.
Also read: Customers Can’t Refuse To Pay Service Tax After Dining: Restaurant Association
Government’s Say On This Extra Charges
The consumer affairs ministry and the National Restaurant Association of India held a meeting on 2 June to discuss the charge’s legality or illegality. According to the consumer affairs ministry, the service charges on food bills are illegal. Also, the ministry advised the restaurant bodies to stop adding this charge right now and they will soon curate a framework for these issues. However, the NRAI holds up to its point of keeping the service charges to be legal, at least until the ultimate disposal.
NRAI issues clarification on #ServiceCharge Issue.#DontGrudgeIt #ServiceChargeIsLegal #Restaurants #Restaurantindustry pic.twitter.com/hYy3Ar2nO4
— NRAI (@NRAI_India) June 2, 2022
Also read: IRCTC Shares List Of Simple To-Dos To Order Food On Trains
The restaurants use the service changes for their staff members. The most percent of the charges is given to the staff members along with their permanent salaries. It acts as an incentive for them.
First Published: June 06, 2022 11:51 AM