A bartender prepares cocktails at the Aer rooftop bar at the Four Seasons Hotel in the Worli area of Mumbai, India (Photographer: Kuni Takahashi/Bloomberg)

To Tip Or Not To Tip: India’s Newest Dilemma

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  • India’s ministry of consumer affairs last week sent out a notification that presented restaurant-goers with a conundrum – whether or not they should pay service charge.

    The ministry stated that it had received complaints that hotels and restaurants were levying a service charge of 5-20 percent, which customers were forced to pay, irrespective of the quality of service provided. This, according to the ministry, was tantamount to unfair trade practice. It clarified, that customers can refuse to pay service charge if they are unsatisfied with the service provided.

    A waiter takes an order from customers at the Indian Coffee House in Cochin, India, on Thursday. (Photograph: Dhiraj Singh/Bloomberg)
    A waiter takes an order from customers at the Indian Coffee House in Cochin, India, on Thursday. (Photograph: Dhiraj Singh/Bloomberg)

    What The Clarification Means

    According to the ministry’s latest clarification, customers need not pay the service charge added to their food or hotel bill, if they are not satisfied with the service provided. The government has also made it mandatory for all establishments to display this clarification on their premises.

    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
    Ministry of Consumer Affairs Notification

    A survey carried out by LocalCircles, a citizen and consumer engagement platform shows that most consumers would prefer service charge to be optional. In fact 68 percent of those surveyed opted for restaurant bills to include a check box, which could be ticked “Yes” if they were satisfied with the service and willing to pay the tip.

    Service Tax Or Service Charge?

    It’s happened to the best of us. Often we end up treating service tax and service charge as one and the same. It’s confusing, and often people don’t bother to read the fine print at the end of a sumptuous meal.

    The same survey revealed that 61 percent of the consumers surveyed wanted service charge to be renamed as “tip”. It’s short and sweet and simple to understand.

    Many Mumbaikars BloombergQuint spoke to were concerned that the ‘tip’ or service charge is kept by the management and owners and never really reaches the staff. Others said that a service charge was justified and welcomed the government’s move to make it optional. They also stated that they were willing to pay an additional tip, if they found the service to be exceptional.