While there are a few hotels that still levy service charge, now, the consumer affairs ministry has requested the Central Board of Direct Taxes to include service tax as a taxable income in tax returns.
This initiative is taken following several reports that many eateries collect the charge still.
A few hotels and restaurants impose about 5 to 20 percent of service charge in the name of tips in spite of the government guidelines that make the charge an optional one.
Ram Vilas Paswan, the consumer affairs minister had stated that popular hotels and restaurants abide by the rule, however there are complaints from consumers via National Consumer Helpline regarding service charge.
Writing about this on his Twitter page, he said the hotels or restaurants should either leave the service charge column empty or mention that the amount is optional.
He has made many tweets where he states that the Dept. of Consumer Affairs has requested the CBDT to take service tax under consideration at the time of tax assessment.
There are continuous complaints being received via NCH and these are also being reported on the media, he adds.
Officers from the Legal Metrology of all states are instructed to monitor all cases where the charge exceeds the Maximum Retail Price.
A number of restaurants in fact display at their entry that they charge 10 percent as service charge. On 21st April, however, the consumer affair ministry had instructed all the eateries not to charge anything extra other than food and beverage. If done so, it will be accounted as unfair trade practice, it was added.