With the government's decision of making service charges optional in restaurants, the consumer now has the discretion of paying the amount out of satisfaction and not compulsion. The move came into effect with the rising number of complaints against hotels and restaurants who have been billing the customers for the "services" whether he or she wants to pay for or not.
With the passing of this decision, there is an impending need for each one of us, as consumers, to understand the difference between service charges and service tax, without confusing the both. While service charge is not a tax levied in any form by the government and is purely charged by restaurants for the services they provide, usually ranging between 5-20 per cent, Service tax, on the other hand, is directly levied by the government at 15 per cent on the service transactions, which is required to be paid by the consumer just the way one is expected to pay his or her income tax.
Many hotels and restaurants have likened the paying of the service charges to tipping the waiters for the services that they provide, which one does, essentially, out of contentment. While many waiters claim of having never been given any part of service charges paid by customers, the picture painted by most eating joints is otherwise. One can as well as assume whose coffers does it fill into.
The government's action is a step towards better consumer freedom and discretion. This, however, would require an active participation on the consumers' behalf in being more aware and not letting the confusion between the both trick them into paying the service charges, if they don't wish to.
So, next time when you feel dissatisfied by the services provided by a hotel or a restaurant, make sure you decline to pay the service "charge" and not the service tax.
