Even though the central government had issued guidelines in April this year stating that it was not compulsory for customers to pay service charge, many hotels and restaurants still do it. The government had directed these eating outlets to put up notices at appropriate places explaining that service charges are discretionary. According to a PTI report, some hotels and restaurants are charging a service charge in the range of 5-20 per cent, in lieu of tips, despite the government’s guidelines to make the levy of such charge as optional. If these hotels or restaurants are still charging you or asking for extra money for their services it comes under the unfair trade practices under the Consumer Protection Act of 1986, as per the guidelines issued by the government.
Now, the problem is that even though a lot of people know that they don’t have to pay this amount, they are helpless when the hotels ask for it. But soon you’ll have a solution to this problem.
To solve this problem, the Consumer Affairs Ministry has asked the Central Board of Direct Taxes (CBDT) to consider service charge as income while assessing the tax returns. The news was confirmed by Consumer Affairs Minister Ram Vilas Paswan on Tuesday who said that the renowned hotel and restaurants have complied with the guidelines but consumer complaints are still being received through the National Consumer Helpline (NCH) about service charge.
“Hotels/restaurants have been asked either to leave the column of service charge blank or mention on the bill that it is optional,” he tweeted. Paswan added that the complaints against those insisting payment of service charge compulsorily are being received through the NCH and are being reported in the media. “In view of seriousness of issue, the Department of Consumer Affairs has written to the CBDT to consider inclusion of Service Charge while assessing Tax,” he said.
The ministry has also ordered the Legal Metrology officers in all states to monitor the cases of charging more than MRP.