Union Consumer Affairs Minister Ram Vilas Paswan has come up with new guidelines disallowing hotels and restaurants from charging service charge from the consumers.
Service charge in hotels, restaurants will be totally voluntary, not mandatory and hotels, restaurants cannot decide how much service charge to be levied, adding that it should be left to customers' discretion.
Paswan announced the guidelines in a series of tweets on Thursday.
Early this year, the centre had asked states to ensure that hotels/ restaurants disseminate this information through displays in their premises.
"A number of complaints from consumers have been received that hotels and restaurants are following the practice of charging 'service charge' in the range of 5-20 per cent, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him," Union Consumer Affairs Ministry said in an official statement.
The Ministry had sought clarification from the Hotel Association of India, which replied that "service charge is completely discretionary and should a customer be dissatisfied with the dining experience, he/she can have it waived off. Therefore, it is deemed to be accepted voluntarily."
Highlighting provisions under the Consumer Protection Act, 1986, the ministry said this law provides that a trade practice which, for the purpose of promoting the sale, use or the supply of any goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice.