1. Service tax: Govt does well to leave tipping to consumers’ discretion

Service tax: Govt does well to leave tipping to consumers’ discretion

The government has done well to notify that restaurants can’t make services charge compulsory, and any payment under that head is up to the customer’s discretion.

By: | New Delhi | Published: January 4, 2017 6:20 AM
Most restaurant-owners claim that service charges are the way that the wait staff supplements their wages and leaving it to the discretion of the customer could dent the latter’s incomes.  (Reuters) Most restaurant-owners claim that service charges are the way that the wait staff supplements their wages and leaving it to the discretion of the customer could dent the latter’s incomes. (Reuters)

While many would never voluntarily tip, even for good service, with restaurants in India factoring in a service charge ranging between 5-20% of the billing for food and beverages into the final bill itself, people were forced to tip even when the service was poor. The government has therefore done well to notify that restaurants can’t make services charge compulsory, and any payment under that head is up to the customer’s discretion.

The decision may not be easy to implement, though, with belligerent hospitality industry associations saying customers were free to choose to not dine at their establishments if they disliked having to pay a service charge. Most restaurant-owners claim that service charges are the way that the wait staff supplements their wages and leaving it to the discretion of the customer could dent the latter’s incomes. Restaurants, of course, can’t be stopped from jacking up prices of food/beverages to make up the amount lost because of an optional service charge. But leaving the service charge optional could also be a way to ensure that wait staff indeed benefited from it instead of the establishment—a study conducted by Caterer magazine for UK-based restaurants in 2014 had showed that workers lost 50% of their tips to employers. Now that the government has addressed the consumers’ concern, it would do well to do the same for the wait staff.

  1. S
    S.K.Gupta
    Jan 4, 2017 at 6:10 am
    It's primary heading is erratic: It must be Service Charge and not Service Tax.
    Reply

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