Does service charge reach staff: Paswan asks hotels

New Delhi: Maintaining that service charge is voluntary, Consumer Affairs Minister Ram Vilas Paswan today said even if a customer pays it willingly, hotels should make public how much of the amount actually reaches to the staff.

Last week, the government had approved new guidelines giving consumers the right to decide whether they wish to pay service charge on hotel or restaurant bills.

"Some hotels say that they distribute 30 per cent of the service charge collected from customers to their staff. Does the service charge reach employees?" Paswan said.

At present, it is not known "how much or if at all fully or a part of the service charge" is distributed amongst the hotel staff, he told reporters.

"So, it is necessary that hotel and restaurants owners maintain a record and make it public," he noted.

Clearing the confusion over service tax and service charge, Paswan said that service tax is mandatory, while service charge is not and consumers should be aware of it.

As per the new guidelines, service charge is not to be incorporated in a hotel and restaurant bill. In fact, the column of service charge should be left blank to customers to fill up before making the final payment.

"Hotels and restaurants should not decide how much service charge is to be paid by the customer and it should be left to the discretion of the customer. If there is mandatory levy of service charge, customers can file a complaint in the Consumer Court," he said elaborating on guidelines.

More awareness among consumers is need of the hour because other businesses offering services like salon are also levying service charge, a senior Consumer Affairs Ministry official said.

Hefty fines and stringent action against violation cannot be taken at present as the current Consumer Protection Law does not empower the ministry to do so.

However, the new Consumer Protection Bill under which an authority will be set up will have powers to take action, Paswan added.