Beware Surat; Don’t Get Cheated: Service Charges in Your Hotel Bills is Nowhere Related to ‘Service Tax’

If you’ve had a meal at a restaurant recently, double check your receipt to make sure that you’ve not been swindled! Many restaurants and hotels have been charging customers excessively by billing them a ‘service charge’, in addition to a service tax. They then try to convince the customer that it is part of the tax that goes to the government.

The Union Finance Ministry has clarified on Tuesday that ‘service charge’ has absolutely nothing to do with service tax, and it does not go into the government coffers. Instead, it ends up in the restaurant owner’s pocket.

In air-conditioned restaurants and hotels, service tax is set at 14%, but only on 40 percent of the total bill amount. The effective service tax rate, therefore works out to a mere 5.6 percent of the total amount charged. Many restaurants are also swindling their customers by charging a 14% tax on the entire bill amount.

Next time, you notice a restaurant swindling you, be a logical Indian, stand up for your rights and demand a refund. Also, don’t forget to take a photo of the overpriced bill, and post it to us!

We appeal Surties that whenever you see restaurants charging service tax more than 5.6%, ask for an explanation.

3 thoughts on “Beware Surat; Don’t Get Cheated: Service Charges in Your Hotel Bills is Nowhere Related to ‘Service Tax’

  • July 15, 2015 at 5:52 pm

    Before some days. I went to fill petrol on udhna petrol pump. They r cheating by refilling less petrol. How they do I don’t know but it is sure yhat they do the same. I have argued abt it but all employees came together and started to fight……..wht can b done for it.

    • July 15, 2015 at 6:06 pm

      Make sure next time you will take receipts for the petrol uou refilled. Then if you have any doubts regarding any cheating; you can contact consumer forum. But you must need that receipt.


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