Home / Companies / News /  Levy of service charge a matter of individual restaurant policy: NRAI
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NEW DELHI : Following the Centre’s warning to restaurants against charging forceful service charge from consumers, industry body National Restaurant Association of India (NRAI) on Tuesday said the levy of service charge by a restaurant is a matter of “individual policy" and refuted claims that such a move is illegal.

On Monday, the consumer affairs, food, and public distribution ministry in a statement, said consumers were being falsely misled on the legality of such charges and harassed for requesting their removal from the bills.

Restaurants normally charge somewhere between five to 10% as service charge. Such charges are however voluntary and not mandatory.

“The levy of service charge by a restaurant is a matter of individual policy to decide if it is to be charged or not. There is no illegality in levying such a charge," the industry association that represents the interests of over 5,00,000 restaurants said in a statement on Tuesday.

Information regarding the amount of service charge is mentioned/displayed by restaurants on their menu cards and otherwise also displayed on the premises, so that customers are well aware of this charge before availing the services, NRAI added.

The department of consumer affairs (DoCA) is set to meet NRAI on 2 June regarding the issue.

The meeting follows after the DoCA took cognizance of media reports as well as grievances registered by consumers on the National Consumer Helpline.

In a letter written by Rohit Kumar Singh, Secretary, department of consumer affairs to the president of NRAI, it has been pointed out that restaurants and eateries are collecting service charge from consumers by default, even though collection of any such charge is voluntary and at the discretion of consumers and not mandatory as per law.

The consumer affairs department also stated that consumers are forced to pay service charge, that it said are often fixed at “arbitrarily" high rates by restaurants.

“Consumers are also being falsely misled on the legality of such charges and harassed by restaurants on making a request to remove such charges from the bill amount," it added.

NRAI said that the matter had come up in 2016-17, and that the industry association had provided its response to the government. “There is nothing new which has been communicated by the Department in its letter for the meeting on 02nd June 2022," NRAI said in its statement.

“Once the customer is made aware of such a charge in advance and then decides to place the order, it becomes an agreement between the parties, and is not an unfair trade practice. GST is also paid on the said charge to the Government," NRAI further said in its response.

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