Consider service charge by hotels as income: Paswan to CBDT

Some hotels and restaurants are charging service charge in the range of 5-20%, in lieu of tips, despite the government’s guidelines to make levy of such charge as optional.

With some hotels and restaurants still levying service charge, the consumer affairs ministry has asked the Central Board of Direct Taxes (CBDT) to consider service charge as income while assessing the tax returns.

Consumer affairs minister Ram Vilas Paswan. (File Photo)

At present, some hotels and restaurants are charging service charge in the range of 5-20%, in lieu of tips, despite the government’s guidelines to make levy of such charge as optional.

Consumer affairs minister Ram Vilas Paswan said renowned hotel and restaurants have complied with the guidelines but consumer complaints are still being received through the National Consumer Helpline (NCH) about service charge.

“Hotels/restaurants have been asked either to leave the column of service charge blank or mention on the bill that it is optional,” he tweeted.

However, Paswan said that complaints against those insisting payment of service charge compulsorily are being received through the NCH and are being reported in the media.

“In view of seriousness of issue, the department of Consumer Affairs has written to the CBDT to consider inclusion of Service Charge while assessing Tax,” he said.

Guidelines were issued in April 2017 to hotels and restaurants for not levying service charge compulsorily.