The Consumer Affairs Ministry last year clarified that customers can refuse to pay the service charge as it is voluntary, or can only the amount they wish to pay.
Nearly over a year after making service charge voluntary, the government has upped the ante against hotels and restaurants who do not pass the money to staffs and workers. The Income Tax department has said that such hotels and restaurants will be liable to pay income tax on such charges, news agency PTI reported.
The IT department has asked its offices to examine accounts of hotels and restaurants to see if there is any non-reporting or under reporting of service charge collected by them. The IT department swung into action after the commerce ministry informed that some restaurants were still charging service charge ‘compulsorily’, violating the guideline, the news agency reported.
The Consumer Affairs Ministry last year clarified that customers can refuse to pay the service charge as it is voluntary, or can only the amount they wish to pay. In June this year, a survey by LocalCircles showed that 32% customers were unaware of the fact that their bill included service charge without their consent and ended up paying it.
According to PTI, the ministry said that there is “every likelihood” that the service charge amount collected is not even distributed among staff and workers of the hotels and restaurants. As service charge is an amount a customer can voluntarily pay for the services provided by staff and employees of a hotel or restaurant.