The issue of service charge has once again brought into the light the contentious practice of levying a voluntary cost mandatorily to the food bill.
A once discretionary practice seen as a gracious practice has become an obligatory add-on to the total bill in many restaurants today with no correspondence to the service and no grain of discretion.
It seems as if there is a bill for the food prepared in the kitchen, and then there is an extra charge for the food to be served to the table. On top of it, a third of restaurant-goers don’t even notice the service charge on their bills, according to a recent survey by LocalCircles.
In fact, many customers often mix up service .charge with service tax, which is a statutory levy under the GST. To understand the overall charges levied on one’s bill amount, it is important to know about the components that constitute the total food bill.
The following charges and taxes are levied on the total bill amount:-
1. Service Charge
2. A 5% GST on food services comprising takeaway facility. An 18% GST is levied if a restaurant is located inside a hotel where the room rate is above Rs 7,500.
3. Service Tax