<p>Bengaluru: Restaurants, hotels and bars in the city have continued to discreetly slip in service charges, despite a Delhi High Court order upholding the Central Consumer Protection Authority's guidelines that service charges or State Goods and Services Tax (SGST) must be voluntary.</p>.<p>They incorporate the service charge amount into their menu prices, fooling customers into believing that they are not charging them for service in the bill, amid claims by many restaurants and hotels that boast about customers “not having to pay service charge”.</p>.<p>Restaurants consider many factors in deciding the price of a dish or drink, such as ingredients, labour, rent, atmosphere, and profit margin. This is where they slip in the service charge. All of them follow their own pricing formulas. </p>.<p>It started after customers started to opt against paying the 2.5% SGST on their bills.</p>.End of hybrid work in October could increase traffic jams by 15% on Bengaluru's ORR.<p><strong>Camouflaging service charge</strong></p>.<p>A restro-bar in Whitefield hides the service charge in its menu. “Because our prices are high, many people opt out of paying the optional service charge. So, when we camouflage it in this fashion, people spend more because they think they are saving on service charge,” the consulting chef of the restaurant told DH.</p>.<p>A popular restaurant on MG Road recently raised its menu prices after the new GST reformation, which reduced GST on food from 18% to 5%.<br>“We used to charge 10% on the final bill as service charge, but many people refused to pay it, so we have now decided to increase our menu prices by 15% to make up the difference.”</p>.<p>Most of the time, the service charge is divided among employees of the restaurant as a substitute for tips.</p>.<p><strong>Legal loophole </strong></p>.<p>While this may seem illegal, it is actually a legal loophole restaurants follow.<br>“If they decide to collect the SGST in the guise of increasing the MRP, that will come under valuation of the restaurant, and is not illegal,” said Razik Fareed, Joint Commissioner, Central GST Department, Bengaluru.</p>.<p>“While it is difficult for us to know how much service charge is collected by a restaurant, at the end of the day if a restaurant collects SGST, they will be taxed on it.”</p>.<p>“When the GST was first set up, an anti-profiteering body was set up to monitor if any benefit was rolled out in tax reduction to businesses.”</p>.<p>All big restaurant chains had started changing their MRP and selling food at a higher value on a lower tax slab to make their profit margins larger.</p>
<p>Bengaluru: Restaurants, hotels and bars in the city have continued to discreetly slip in service charges, despite a Delhi High Court order upholding the Central Consumer Protection Authority's guidelines that service charges or State Goods and Services Tax (SGST) must be voluntary.</p>.<p>They incorporate the service charge amount into their menu prices, fooling customers into believing that they are not charging them for service in the bill, amid claims by many restaurants and hotels that boast about customers “not having to pay service charge”.</p>.<p>Restaurants consider many factors in deciding the price of a dish or drink, such as ingredients, labour, rent, atmosphere, and profit margin. This is where they slip in the service charge. All of them follow their own pricing formulas. </p>.<p>It started after customers started to opt against paying the 2.5% SGST on their bills.</p>.End of hybrid work in October could increase traffic jams by 15% on Bengaluru's ORR.<p><strong>Camouflaging service charge</strong></p>.<p>A restro-bar in Whitefield hides the service charge in its menu. “Because our prices are high, many people opt out of paying the optional service charge. So, when we camouflage it in this fashion, people spend more because they think they are saving on service charge,” the consulting chef of the restaurant told DH.</p>.<p>A popular restaurant on MG Road recently raised its menu prices after the new GST reformation, which reduced GST on food from 18% to 5%.<br>“We used to charge 10% on the final bill as service charge, but many people refused to pay it, so we have now decided to increase our menu prices by 15% to make up the difference.”</p>.<p>Most of the time, the service charge is divided among employees of the restaurant as a substitute for tips.</p>.<p><strong>Legal loophole </strong></p>.<p>While this may seem illegal, it is actually a legal loophole restaurants follow.<br>“If they decide to collect the SGST in the guise of increasing the MRP, that will come under valuation of the restaurant, and is not illegal,” said Razik Fareed, Joint Commissioner, Central GST Department, Bengaluru.</p>.<p>“While it is difficult for us to know how much service charge is collected by a restaurant, at the end of the day if a restaurant collects SGST, they will be taxed on it.”</p>.<p>“When the GST was first set up, an anti-profiteering body was set up to monitor if any benefit was rolled out in tax reduction to businesses.”</p>.<p>All big restaurant chains had started changing their MRP and selling food at a higher value on a lower tax slab to make their profit margins larger.</p>