The Consumer Protection Authority of India has banned hotels and restaurants from levying service charges on the bills. The order came after officials said there had been an increase in complaints of customers being forced to pay costs.
Restaurants often add a tip of 5% to 15% to the customer’s bill under the “service charge” category.
But the new rules say restaurants can no longer “add service charges by default or automatically” to the bill. The new guidelines bar restaurants from asking customers “under any other name” or “denying service or admission to customers who refuse to pay tip”.
There has been an absurd row over tipping at restaurants in the country for a few years now, with customers complaining that they were not informed about this extra charge.
In 2017, the government’s Department of Consumer Affairs issued guidelines stating that customers would only pay the prices displayed on menu cards and government taxes.
The department said people may or may not use their “discretion” to leave a tip and that the additional charge without the customer’s consent amounts to “unfair trade practice.”
Restaurants have, however, continued to add the tip to the bill, leaving it up to patrons to contest the extra charge.
Last month, the government called a meeting with the National Restaurant Association of India (NRAI), saying it had received an increasing number of complaints from consumers that they were still being “forced to pay service charges, often fixed at arbitrarily high rates” and that “they are harassed if they request to remove it from the bill”.
The NRAI, which represents more than half a million restaurants, had defended the practice, saying it was a “matter of individual policy” and levying such a charge was not “illegal”.
They also argued that the service charge brought additional revenue to the government too since restaurants paid a tax on what they charged customers.
The new guidelines say that consumers can lodge their complaints online or through the National Consumer Helpline.