Restaurants that have made service charge mandatory may now have to pay 'special' tax: Reports

Restaurants that have made service charge mandatory may now have to pay a separate tax to the government, it has been reported.

The government earlier this year had clarified that service charge on a food bill was optional and the customer can choose to waive it. However, some restaurants have still made it mandatory for the guests.

As per a Times of India report, the Union consumer affairs ministry has asked the Central Board of Direct Taxes (CBDT) to ask officials to take into account service charge collection by hotels and eateries while assessing their tax liabilities.

The report, quoting officials, further said that restaurants still continuing with compulsory service charge "must come out with a white paper to prove they were distributing the collected amount to the staff. If not, the collection should be taken into account as part of their income".

Meanwhile, in a series of tweets consumer affairs minister Ram Vilas Paswan wrote:

Hotels/restaurants have been asked either to leave the column of Service Charge blank or mention on the Bill that it is optional.

— Ram Vilas Paswan (@irvpaswan) September 12, 2017

Complaints against those insisting payment of Service Charge compulsorily are being received through NCH and are being reported in Media.

— Ram Vilas Paswan (@irvpaswan) September 12, 2017

Complaints against those insisting payment of Service Charge compulsorily are being received through NCH and are being reported in Media.

— Ram Vilas Paswan (@irvpaswan) September 12, 2017

In view of seriousness of issue, Deptt. of Consumer Affairs has written to CBDT to consider inclusion of Service Charge while assessing Tax.

— Ram Vilas Paswan (@irvpaswan) September 12, 2017