The Ministry of Consumer Affairs on Thursday told restaurants not to levy ‘service charge’ on bills, dubbing the move ‘illegal’. The ministry said it will soon formulate a legal framework, that among other things, will prevent hospitality establishments from levying the charge. The move is being planned to protect the interests of consumers.
The Department of Consumer Affairs (DoCA) called the hospitality industry association Federation of Hotel & Restaurant Associations of India (FHRAI) for a meeting on Thursday to discuss the matter on restaurant bills.
FHRAI in a clarification earlier said service charge known colloquially as ’tip’ is the amount paid to the staff of the restaurant or other similar establishments by patrons.
“Service charge is considered a beneficial payment since it is meant for the benefit of the staff of the establishment. So, some establishments make a conscious choice to adopt a beneficial policy towards its staff members by assuring them a minimum tip which is a percentage of the rest of the charges. There is nothing illegal nor is it in violation of the law for restaurants to collect a service charge,” Gurbaxish Singh Kohli, Vice President, FHRAI had said in a statement earlier.
