GST
Service charge on the restaurant bill and GST
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Facts
Service charge is not a tax. Central Consumer Protection Authority guidelines of July 2022 say restaurants cannot add it by default or force customers to pay it. If service charge is charged, GST applies on it too because it is part of the value.
Provisions and law
- Sec 15, CGST Act 2017Value of supply includes all amounts charged by the supplier
- CCPA guidelines on service charge, 4 July 2022Service charge cannot be added automatically or by default; it is voluntary
Analysis
On a ₹2,000 bill with 10 percent service charge, GST at 5 percent applies on ₹2,200. You can ask the restaurant to remove the service charge, in which case GST falls back to ₹100. If they refuse, you can complain to the National Consumer Helpline.
Conclusion
- Ask the restaurant to remove service charge if you do not wish to pay it.
- Check GST is on the right base.
- Ask for a revised bill.
- Complain on consumerhelpline.gov.in or call 1915 if forced.
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Checking GST on a bill: GSTIN validity, rate and tax shown
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