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What Is A Restaurant Service Charge – Is It Mandatory To Pay Service Charges At Restaurants?

What Is A Restaurant Service Charge
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With a reduction in the Covid-19 cases, we are now free to enjoy ourselves outside in a lavish restaurant or a classical eatery! But, with the sky-touching prices of restaurants, it is becoming increasingly tough for a layman to avail the facilities of a restaurant. Thus, to ease the confusion, the service charges restaurants are charging their customers are under inspection!

While some are in favor of the restaurants charging “tip” from their customers, others are against the system. Read this article to know what is a restaurant service charge and what NRAI says about the same.

What Is A Restaurant Service Charge? 

To understand what is a restaurant service charge, let us take a look at the restaurant bill in India and its components. Apart from the obvious food charge, the food bill consists of a GST and a service charge. So, what is a restaurant service charge? 

According to FHRAI, the service charges restaurants are levying from their customers include a “tip”, generally 5-10℅ of the total bill to be paid to the staff members for serving them. While the service charges restaurants are levying from their customers are printed on the menu card, it has come under debate as it is still not clear if the charges to be paid are voluntary or discretionary. 

Is Service Charge Compulsory In Restaurants? 

While the service charges restaurants are levying on their customers are under the discretion of the customers to pay or not, the restaurants have made it compulsory for the customers to pay them. Added to it, if the customers ask to remove the service charges, it becomes embarrassing for them to convince the restaurant owners. Moreover, sometimes they also face harassment and feel cheated. 

service charges restaurants

Thus, to solve the ongoing debate, the Department of Consumer Affairs wrote a letter to NRAI stating that though the restaurants are demanding charges from the customers by default, no such thing is under mandate by law! Thus, a meeting will be held to look into the matter on 2nd June 2022 by the DoCA and the NRAI. 

What Does The NRAI Say? 

The NRAI has responded that the body has previously commented on the matter a few years back and there is nothing new to be solved at the meeting on 2nd June. Added to it, the body also opinionated that there is nothing illegal to charge for services from a customer. The service charges are clearly mentioned on the menu card and thus, a customer is made well informed about the policies before availing of the services of a restaurant. Thus, the service charges restaurants are demanding from their customers do not fall under unfair trade practices as cited by DoCA. 

In response, the DoCA stated that a customer’s entry into a restaurant is not a consent that customers have to pay the service charges demanded by the respective eateries! Moreover, it is also not clear if the service charges are really going into the hands of the staff and not the restaurateurs. 


Amidst the debate between the NRAI and DoCA on the service charges restaurants are levying on their customers, the public has taken to Twitter to share their opinion. While few of them supported the levying of service charges, others went against the system and criticized it! We still need to wait for the final decision till June 2, 2022. What do you think, is it legal to ask for service charges from the customers?

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