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Good News: Service Tax Not Mandatory At Hotels


In a major relief to food lovers and occasional diners, the Union Minister for Food & Public Distribution, Consumer Affairs, Ram Vilas Paswan stated that paying service tax at hotels and restaurants is only at customer’s discretion.

“Restaurants are billing service charges in addition to taxes. Service charge is optional. Consumer has a discretion to pay or not. Customers who are not satisfied with services in any hotel or restaurant need not pay service charges,” the minister said.

Until now, at least 5-20 percent service tax is levied by the hotels on the overall food bills, apart from the Swachh Bharat Cess and other taxes, irrespective of the kind of service provided to them. But now, customers can refuse to pay the service charge printed on their bills if they are not satisfied with their dining experience.

The Central government, in a press release yesterday, has also directed the state governments to “sensitize the companies, hotels and restaurants in the states regarding aforementioned provisions of the Consumer Protection Act, 1986.”

The state governments are also asked to advise the hotels and restaurants to clearly display information at the appropriate place in the hotels and restaurants that the service charges are discretionary and that a customer dissatisfied with the services can have it waived off.

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