Service Charge Rule: Are restaurants adding a service charge to your bill? Know your rights..
No Service Charge on Food Bills in Restaurants: Eating out is becoming an expensive affair, but did you know that you're also being fleeced in the name of your food bill? Restaurants often secretly add a 'service charge' to the bill, and customers pay it assuming it's mandatory. If this is happening to you, be aware. The Central Consumer Protection Authority (CCPA) has now cracked down on such restaurants.
Often, we don't pay attention to the bill after eating at a restaurant. Besides the food price and GST, there's a column for 'service charge'. In a recent case, the CCPA has fined 27 restaurants across the country for forcibly collecting service charges from customers. They have been fined up to Rs 50,000 each and ordered to return the collected money to the customers.
What do the CCPA guidelines say?
Under the Consumer Protection Act, 2019, mandatorily collecting a service charge is an 'unfair trade practice'. The CCPA issued clear guidelines on July 4, 2022, which were upheld by the Delhi High Court in March 2025.
Understand your rights in 5 points:
Automatic service charge is not allowed: No hotel or restaurant can automatically or by default add a service charge to the bill. Collection under a different name is prohibited: Collecting the service charge under any other name is also completely prohibited. Voluntary and optional: It is entirely up to your discretion. Restaurants must clearly inform customers that the service charge is voluntary. No denial of entry: If you refuse to pay the service charge, the restaurant cannot deny you entry or service. Right to complain: If a restaurant forcibly demands money, you can file a complaint on the National Consumer Helpline (1930).
Action was taken against 27 restaurants, and fines were also imposed
The Central Consumer Protection Authority (CCPA) has taken strict action against 27 restaurants across the country on its own initiative (suo motu). This action was taken after investigating complaints received on the government helpline number and examining the bills. The investigation revealed that establishments like 'Cafe Blue Bottle' in Patna and 'China Gate Restaurant' (Bora Bora) in Mumbai were directly adding a 10% service charge to the bills.
The CCPA directed Cafe Blue Bottle, Patna, to refund the customer's full amount, immediately stop levying the service charge, and pay a fine of ₹30,000. While China Gate (Bora Bora) in Mumbai refunded the customer's money during the hearing, the CCPA imposed a hefty fine of ₹50,000 along with instructions to modify their billing software.
No excuses will be accepted regarding service charges!
The CCPA has clarified that, after the Delhi High Court's March 2025 judgment, no excuses will be accepted. The court has held that mandatorily levying a service charge is against the law, and all restaurants must comply with the CCPA guidelines. The authority is now closely monitoring complaints received on the National Consumer Helpline (NCH) to protect consumer rights.
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