As the government has said it will soon come up with a robust framework with respect to the service charges levied by whom? restaurant And hotels, restaurants are saying that the service charge is still too much legal till the final settlement. National Restaurant Association of India (NRAI) has said that the Ministry of Consumer Affairs has heard the views of all stakeholders and will review all inputs before taking a decision on the matter. Here’s what taxes and fees you pay on the restaurant bill:
break-up of a restaurant bill
A restaurant’s overall bill includes the cost of food and beverages, goods and services tax (GST) and service charges. Billed at restaurants, including restaurants within a hotel, where room charges are less than Rs 7,500, without Input Tax Credit (ITC), 5 per cent GST is levied. However, if a restaurant is located within a hotel where room tariff is greater than or equal to Rs 7,500, the GST rate along with input tax credit will be 18 per cent.
Apart from this, restaurants also charge a service charge ranging from 5 per cent to 10 per cent. The service charge has become a topic of discussion after consumer complaints by the consumer affairs ministry to convene a meeting with restaurant bodies and discuss the legality of the fee.
Service Charge: What the Government and Restaurants Say
Following consumer complaints, the ministry had scheduled a meeting with the National Restaurant Association of India (NRAI) on June 2 to discuss issues related to service charges levied by restaurants. Restaurants usually charge a 10 per cent service charge on the total bill.
The consumer affairs ministry has termed the service charges levied by restaurants as illegal and asked NRAI to stop the practice immediately. It also said that levying service charges is adversely affecting consumers, sources told CNBC-TV18.
The consumer affairs ministry said it would soon put in place a robust framework with regard to service charges levied by restaurants and hotels. However, NRAI has said that the ministry has heard the views of all the stakeholders and will review all the inputs before taking a decision on the matter and till the final disposal, the service charge is still very much legal.
“The media report regarding the decision allegedly taken in the meeting of the Department of Consumer Affairs today regarding the validity of service charges is untrue. The department has heard the views of all the stakeholders and will review all the inputs before taking a decision on the matter. Till the final settlement, the service charge is still very much legal,” NRAI said in a tweet.
According to an official statement from the Department of Consumer Affairs, “During the meeting, major issues related to service charges were raised by the consumers on the National Consumer Helpline of DoCA, such as mandatory levy of service charges, defaulting without the consent of the consumer. Adding a fee, insisting that such a fee is optional and voluntary and embarrassing consumers if they resist paying such a fee, etc. were discussed. Further, the guidelines on Fair Trade Practices relating to levy of service charges by hotels/restaurants dated 21.04.2017 published by DoCA are also referred to.
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