Service charge not mandatory now: Centre

Approving the guidelines on service charge, the Centre on Friday announced that service charge is completely voluntary and not mandatory.

Taking to Twitter, Union Minister for Food and Public Distribution, Consumer Affairs Ram Vilas Paswan informed that the guidelines are being sent to states for necessary action at their end.

It maybe recalled that in January this year, Paswan had promised that the issue of service charge was an unfair trade practice that need to be addressed effectively through a provision in the new Consumer Protection Bill.

Paswan had then also said, "There is no definition of 'service charge' in law but taking service charge without discretion of consumers is an "unfair trade practice."

Service tax is a mandatory component in the restaurant's bill, service charges by law has always been a voluntary component.

This charge, by law, is supposed to be levied only if the customer is happy with the service. The amount so collected goes to the accounts of the waiters which the restaurants deposit at regular intervals.

Arbitrary surcharge being levied as part of the bill by some hotels and restaurants in the name of service charge has been a major sore point with consumers.

Many consumer rights groups have been filing complaints with the government to end this unfair practice.