The government has barred hotels and restaurants from forcing customers to pay service charge as part of the food bill.
An order issued by the Central Consumer Protection Authority (CCPA) today said hotels and restaurants are banned from adding service charges by default in bills.
Those guidelines were released after a rise in consumer complaints about restaurants charging a forced tip.
While there was some confusion previously when the Consumer Affairs Ministry had asked restaurants and hotels not to charge a service charge, there were no clear guidelines, and the National Restaurant Association of India (NRAI) had argued that a charge for services was "legal" until the government formed a legal framework.
Now, the latest guidelines are clear and give consumers the right to lodge a complaint on the National Consumer Helpline (NCH) against any service fee charged. Consumers can also submit a complaint electronically through the e-daakhil portal for quick and efficient resolution.
The guidelines say, "no hotels or restaurants shall add service charge automatically or by default in the bill." It said there should be no service charge collection by any other name.
"No restriction on entry or provision of services based on a collection of service charge shall be imposed on consumers," added the order.
Hotels and restaurants now cannot compel customers to pay a service fee; rather, it would be their choice.