Hotels maintain that service charge is mandatory

A few days back government announced that paying a service charge at restaurants is not mandatory. The circular said that restaurants billing 'service charges' in addition to taxes is optional and the consumer has the discretion to pay 'service charge' or not. Currently, the service charges at restaurants range from 5 to 20 percent of the bill.

However, NRAI (National Restaurant Association of India), the apex body of restaurants in India wrote to the Department of Consumer Affairs, requesting them to withdraw the notice as there was nothing illegal about the charge. To emphasise on the gravitas of the change, the president claimed that this new order may affect approximately 8.5 million people working with the food service industry.

Many restaurants have chosen not to abide by the change, and continue to charge the additional service charge. While some hotels are claiming that the government notification has not reached them, many claim that the service charge is for the servers, and will remain mandatory despite what government says.

Consumers Affair Secretary, Hem Kumar Pandey said, "Service charge is an unfair trade practice. The consumers should not be party to this." While the government has not issued any further circular post the notice, the final outcome of this deadlock remains to be seen.