Service charge

To pay or not to pay service charges in restaurants? Center Calls It ‘Illegal’, Host Organization Calls It ‘Tipping’ | Economy News

New Delhi: The central government on Thursday ordered restaurants not to levy service charges on bills. In a notification, the Department of Consumer Affairs said charging service fees is illegal, adding that it would take steps to come up with a legal framework soon. The ministry will also take steps to prevent restaurants from charging service fees on bills to protect consumer interests.

In response to customer complaints, the Department of Consumer Affairs (DoCA) held a meeting today (June 2) with the hospitality industry association Federation of Hotel and Restaurant Associations of India (FHRAI ) to discuss the issue of service fees. on restaurant bills.

Meanwhile, the FHRAI clarified that a restaurant charging a service fee is neither illegal nor in violation of the law. “The Association explained that a service charge, like any other charge collected by an establishment, is part of the invitation offered by the restaurant to potential customers. It is up to customers to decide whether they wish to patronize the restaurant. or not,” the apex added. said the body.

Last month, the Department of Consumer Affairs, Food and Public Distribution said paying “service fees” is a voluntary act dependent on consumers’ discretion and that restaurants cannot force consumers to pay them.

Rohit Kumar Singh, Secretary of the Department of Consumer Affairs, said in a letter to the President of the National Restaurant Association of India (NRAI) that it has been pointed out that restaurants and eateries collect service charges from consumers by default. , although the collection of such fees is voluntary and at the discretion of consumers and not mandatory by law.

“It was pointed out in the letter that consumers are forced to pay service charges, often set at arbitrarily high rates by restaurants. Consumers are also being misled about the legality of these charges and harassed by restaurants when they ask to remove these charges from the bill amount. “Given that this issue affects consumers as a whole on a daily basis and has significant consumer rights ramifications, the department has found it necessary to examine it more closely and in detail,” the letter adds. Also Read: Tata-Owned Air India Introduces VRS Scheme for Thousands of Employees

In a clarification last month, FHRAI said service charges are known colloquially as “tipping” and are paid directly to restaurant staff or other employees of other similar establishments. Also read: Social media rules set to change, Center to set up grievance appeal board