The worst part of dining out has to be shelling out extra bucks for bad service. Next time you dine out and feel that the bills are being inflated with extra service charges, you might just have an option to say no. Sometimes the taxes are so high that they just act as a bummer to all the joie de vivre of a night out.
The new cess (anything between five per cent and 20 per cent) that took everyone by shock making the cost of dining go up leaps and bounds might just get struck off your bills soon. We speak to city folks and restaurant owners on the service charge rules.
Bobby Antony, Fenny’s Koramangala says, “Whether paying a service charge should be made mandatory or not is still not decided. It’s a confused message to both customers and restaurants, and I hope the cat is out of the bag soon. The government has to come out with a final verdict and not leave it to the discretion of the diners or restaurant owners to pay that service charge as it is bound to create a rift. Just like the pricing of food and drinks is decided by restaurants and pubs, the service charge should be left to be decided by restaurant owners to avoid any confusion. There should be clarity on this subject is all that I’m asking for.”
There is still debate going on whether the service charge on a food bill is compulsory or not, and whether a customer can choose to have it waived if not satisfied with the experience.
Omer Faiyaz, entrepreneur and foodie adds, “Tips given to a waiter is an appreciation towards good service, it encourages them to do better, albeit restaurants shouldn’t really make it compulsory to pay tips aka service charge and neither should they consider tips as an additional income to set a standard wage for a waiter. I hope this ruling is abolished soon.”
Lokesh Kasalgere of Broadway, HSR Layout, says, “Being in the service industry, I would say from the owner’s and staff’s perspective that upto 5 per cent mandatory service charge is fine and no one would feel the pinch.”
Clarification is being sought from the authorities whether service charge is completely discretionary and if the customer can request for a waiver. Rajagopal Thulasidasan, head of business intelligence MENA, niSpana Innovative Platforms agrees that there’s still no clarity.
“The service charges still remains an option which can lead to unpleasant situations at restaurants. Apart from service charge, restaurants charge 12.5 per cent value added tax and 6 per cent service tax. As per restaurants and hotels, they have the legal right to charge a fee for the service provided and the consumer has his choice of whether or not to visit that restaurant again. If service charges are made optional, an unaccounted parallel economy emerges based on tips received by waiters. Government authorities and the restaurant and hotel associations have to take a bold decision on this, rather than leaving it as an option as that will create an awkward experience when dining out. There’s no clarity that the service charges and taxes are duly forwarded as intended. Don’t the restaurant people take into account all the expenses, be it staff or supplies, then realistically speaking you are paying what is being expected, keeping a profitable margin. Then what is the extra service charge for? As a consumer, I would definitely want to have an option to pay the extra buck or not.” Shahid Haq, Empire adds, “We have left it to the discretion of our customers to pay the service charges and have mentioned it on our menu also.”
Fact Finder
Service tax is the tax levied by the government on the services rendered by restaurants and is the same in all states. Service tax is 14 per cent of 40 per cent on the total bill. Service charge is taken by a restaurant for offering its services to you. It is not a tax and is not levied by the government. It varies from 5-20 per cent.
