The Economics of Tipping
Service Charge Versus Tips in India
Many Indian restaurants add a service charge to bills, and the consumer authority ruled in 2022 that adding it automatically is unfair, leading to legal disputes.
A live issue.
Practice
Restaurants add 5 to 10 per cent as a service charge and say it goes to staff.
Complaint
Customers complained that it was compulsory and sometimes not passed to staff.
2022 guidelines
The Central Consumer Protection Authority said that automatically adding service charge is an unfair trade practice and that customers can ask to have it removed.
Disputes
Restaurant associations challenged the guidelines in court.
A diner asks the manager to remove the service charge, which appears as a default line.
It's a restaurant's choice.
- Service charge is often added automatically.
- CCPA guidelines call it unfair if compulsory.
- Customers can ask to remove it.
- Legal challenges followed.
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