India bars hotels, restaurants from levying service charge on food bills

People dine in a restaurant after relaxation in restrictions of COVID-19 lockdown in Amritsar district of India's northern state Punjab, June 16, 2021. (File photo: Xinhua)

NEW DELHI, July 6 (Xinhua) -- Indian government's department of consumer affairs Wednesday said hotels and restaurants have been barred from levying a service charge on food bills.

The order of ban has been issued by the Central Consumer Protection Authority (CCPA) of the Indian government's department of consumer affairs.

"The guidelines issued by the CCPA state that hotels or restaurants will not automatically add service charges to the food bill. Now service charges from the customers cannot be recovered by any other name," a statement issued by the department of consumer affairs said.

The order stating that hotels or restaurants shall not add service charges automatically or by default in the food bill was issued on Monday by the CCPA after authorities said there had been an increase in complaints by customers being forced to pay the charge.

"It has come to the notice of the CCPA through many grievances registered on the national consumer helpline that restaurants and hotels are levying service charge in the bill by default, without informing consumers that paying such charge is voluntary and optional."

"Further, service charge is being levied in addition to the total price of the food items mentioned in the menu and applicable taxes, often in the guise of some other fee or charge," reads the CCPA guidelines.

According to the CCPA, a component of service is inherent in the price of food and beverages offered by restaurants or hotels.

Restaurants in India often add a 5 percent to 15 percent tip to a customer's bill under a "service charge" category.

The CCPA said consumers can lodge complaints if they find that a hotel or restaurant was levying service charges in violation of the guidelines.

In May this year, the National Restaurant Association of India (NRAI) in its meeting with the government defended service charges being levied by restaurants across the country, saying there is no illegality in levying such a charge.

The NRAI represents more than half a million restaurants in the country.