Consumer can choose NOT to pay service charge: Govt

[vgane]

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I was under the opinion that Service tax is charged by Government! But actually it is being used in lieu of tips...But as we are unaware about this, we pay tips too..So the Service tax actually goes to fill the coffers of the Hoteliers!! The clarification is long over due!!

[h=1]Consumer can choose NOT to pay service charge: Govt [/h]January 02, 2017 16:46

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The Department of Consumer Affairs on Monday said that it is optional on restaurants to add service charges in addition to taxes in the bill and the consumer has discretion to pay service charge or not.

This is the full statement:

"A number of complaints from consumers have been received that hotels and restaurants are following the practice of charging service charge in the range of 5-20%, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him.


"The Consumer Protection Act, 1986 provides that a trade practice which, for the purpose of promoting the sale, use or the supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice and that a consumer can make a complaint to the appropriate consumer forum established under the Act against such unfair trade practices.


"In this context, the department of Consumer Affairs, Central Government has called for clarification from the Hotel Association of India, which have replied that the service charge is completely discretionary and should a customer be dissatisfied with the dining experience he/she can have it waived off. Therefore, it is deemed to be accepted voluntarily."


Service charge is collected by the restaurant for rendering its service to you. It is not a tax and is not levied by the government but purely charged by the restaurants. They are free to charge any amount as there are no guidelines, but it usually varies from 4 to 10 percent


http://news.rediff.com/commentary/2...-charge-govt/f438a50a2ab6b5880c61fe60e009168e

 

[krish44]

With this classification and explanation do you think,consumer can refuse to pay service charge?

It is hogwash.

Service charge should just be scrapped.

Tips if any should be left to those who get service.

 

[tbs]

With this classification and explanation do you think,consumer can refuse to pay service charge?

It is hogwash.

Service charge should just be scrapped.

Tips if any should be left to those who get service.

hi

i agreed,,,,no service/customer satisfaction in india.....i visited recently in A/C restuarant......the food quality was very bad...

still they charge service charge with tips.....i feel street foods are better than big restaurants in india...

 

[krish44]

Every bill in a four star gets loaded upto 35 % due to taxes and service charge and waiters expect tips over that.

In metros food is about four times as expensive as compared to small cities.

 

[prasad1]

With this classification and explanation do you think,consumer can refuse to pay service charge?

It is hogwash.

Service charge should just be scrapped.

Tips if any should be left to those who get service.

I agree with your POV.
Instead of this muddied explanation the government should have dispensed with this "Service Fee" all together.
Instead of creating a confrontational situation, the government should have made it illegal to add this "service fee" provision. Let the hotel and restaurants increase their food prices to cover all the costs.

 

[V.Balasubramani]

It is consumer's discretion and should not be enforced...

Service charge waiver in hotels gets thumbs up

Chennai: The Department of Consumer Affairs has confirmed that the payment of service charges by customers at restaurants across the country has been made optional.

This means that now, if a customer is dissatisfi ed with the services and hospitality provided by a restaurant, they can ask for the service charge in their bill to be waived.

Restaurants usually charge up to 20 per cent in the bills as service charge, relating it to the kind of service they provide. Even if the customers are dissatisfied and choose not to tip, service charge was still mandatory.
...........
...........

Consumer Affairs Secretary Hem Pande, explained, "This decision is made after the many complaints we received from consumers who have been dissatisfied with restaurants but still paid the service charge. The hotels and restaurants must give a choice to consumers whether they want to pay the service charge or not."

Riyaz Amlani, president of the National Restaurant Association of India, said, "I don’t think the waiving off bit is fair. A restaurant is well within its rights to charge whatever it chooses for its goods and services."

Usually, in a restaurant bill, a 14 per cent value-added tax and a 6 per cent service tax is added along with a steep 15 or 20 per cent service charge. But after Monday, the payment of the service charge is left to the discretion of the customers who will now closely assess the services and hospitality of the restaurant before paying for them.

Source: http://newstodaynet.com/chennai/service-charge-waiver-hotels-gets-thumbs

 

[prasad1]

Dumb of The Department of Consumer Affairs to say 'pay the service charge' if you want. Why not abolish it,let people tip if they want?

 

[V.Balasubramani]

Dumb of The Department of Consumer Affairs to say 'pay the service charge' if you want. Why not abolish it,let people tip if they want?

The History of Service Tax dates back to 1994.

"History of Service Tax[edit]


Dr. Raja Chelliah Committee on tax reforms recommended the introduction of service tax. Service tax had been first levied at a rate of five per cent flat from 1 July 1994 till 13 May 2003, at the rate of eight percent flat w.e.f 1 plus an education cess of 2% thereon w.e.f 10 September 2004 on the services provided by service providers. The rate of service tax was increased to 12% by Finance Act, 2006 w.e.f 18.4.2006. Finance Act, 2007 has imposed a new secondary and higher education cess of one percent on the service tax w.e.f 11.5.2007, increasing the total education cess to three percent and a total levy of 12.36 percent. The revenue from the service tax to the Government of India have shown a steady rise since its inception in 1994. The tax collections have grown substantially since 1994–95 i.e. from ₹410 crore (US$61 million) in 1994–95 to ₹132,518 crore (US$20 billion) in 2012–13. The total number of Taxable services also increased from 3 in 1994 to 119 in 2012. However, from 1 July 2012 the concept of taxation on services was changed from a 'Selected service approach' to a 'Negative List regime'. This changed the taxation system of services from tax on some Selected
services to tax being levied on the every service other than services mentioned in Negative list.[SUP][1][/SUP]

Under the Service tax from the year of original levying year of 1994 are constantly growing. The collections are shown as in the following table:[SUP][citation needed]
[/SUP]

Financial Year	Revenue Rupees(in crores)	Number of services	Number of Assessees
1993–1994	254	2	2568
1994–1995	407	3	3943
1995–1996	862	6	4866
1996–1997	1059	6	13982
1997–1998	1586	18	45991
1998–1999	1957	26	107479
1999–2000	2128	26	115495
2000–2001	2613	26	122326
2001–2002	3302	41	187577
2002–2003	4122	52	232048
2003–2004	7891	62	403856
2004–2005	14200	75	774988
2005–2006	23055	84	846155
2006–2007	37598	99	940641
2007–2008	51301	100	1073075
2008–2009	60941	106	1204570
2009–2010	58422	109	1307286
2010–2011	71016	117	1372274
2011–2012	97509	119	1535570
2012–2013	132518	Negative List Regime	1712617

Rates[edit]


Service Tax which started out at a nominal 5% is now at 15%.[SUP][citation needed][/SUP]

It was increased to 14% for transactions that happened on or after 1 June 2015 and then for transactions that occurred on or after 15 Nov 2015, the new Swachh Bharat Cess at 0.5% was also added to the Service Tax. Therefore, the effective rate became 14.5% with effect from 15 Nov 2015.[SUP][citation needed][/SUP]

For transactions that occurred on or after 1 June 2016 this tax is at 15%.[SUP][2][/SUP] 2016 Union budget of India has proposed to impose a cess, called the Krishi Kalyan Cess, at 0.5% on all taxable services effective from 1 June 2016. The current service tax is at 15%.[SUP][3][/SUP]
[SUP]Source: https://en.wikipedia.org/wiki/Service_Tax[/SUP]

Consumer Affairs Secretary Hem Pande, explained, "This decision is made after the many complaints we received from consumers who have been dissatisfied with restaurants but still paid the service charge. The hotels and restaurants must give a choice to consumers whether they want to pay the service charge or not."

Source: http://newstodaynet.com/chennai/service-charge-waiver-hotels-gets-thumbs

May be a nice development is that there is some one to take action against complaints now, unlike during the periods of P.Ms who were mostly in 'SLEEPING MODE' and 'SILENT MODE'. LOL

 

[prasad1]

Despite the government's repeated stand that service charge is optional, the fact that eateries across India include this fee in bills of consumers has exposed why central advisories lack bite.



Advisories are not binding on the stakeholders and states hardly pay heed to such stands of the Centre. While consumer affairs ministry officials admit to their advisories falling in deaf ears, they have no other option but to create awareness.

http://timesofindia.indiatimes.com/india/non-binding-rules-let-hotels-go-scot-free-on-service-charge/articleshow/56323543.cms

 

[vgane]

Nice one!!