In the Name of Service Charge Restaurants Cheat People with Fake Compulsory Tip


Do you know you may have paid tips without your knowledge after the restaurant charged you a compulsory 5% tip in the name of service charge? Well, sorry to say this you may have been fooled again and again.

Let me put my own example here, a week ago, I took a few friends of mine out to dinner to a restaurant. When the bill came, I looked at the total and to my surprise, 6% service charge was added in the total bill.

Let me explain how. This was the bill given to me by the waiter:

Food and beverages = Rs. 1930
Service Charge = Rs. 144.75
Service Tax = Rs. 102.49
V.A.T = Rs. 231.24
Total = Rs. 2408.00

A service charge of Rs. 144.75 is a big amount and when I spoke to the management about it, they said, “It is standard and we can’t change it”. However, a service tax of 12.36% is applicable on 40% of the bill and now the service charge is an additional burden on the customer.


And if you are paying bill through credit/debit card, waiters may ask you for a tip and you may even give the tip without knowing that a tip has already been taken in the form of service charge.

In my case, I did not pay an additional tip to the service staff. I paid the exact bill and left the restaurant without paying any tip, because service charge is nothing but a tip paid to the waiter. Even after paying the service charge, the waiter was waiting for an additional tip!

Many of us do not know that service charge is not mandatory as per government regulations; it is entirely at the restaurant’s discretion. But most top restaurants charge a service charge ranging from 5-10% on the total bill and the amount is shared among the service staff.

Many customers are not aware that a tip has already been charged in the name of service charge. A few customers may be aware of this and they don’t pay the tip, but waiters claim ignorance or say management retains the service charge and they don’t get any share of it.

Do restaurants that collect service charge assume their customers are cheap?
Why do these restaurants collect service charge, do they think that the customers are so cheap that they don’t even pay a tip before leaving the restaurant?

A tip should be voluntary for the quality of service the customer gets at the restaurant. But, adding service charge on the bill is like forcing people to pay even though the customer is not happy with the service. On top of paying the service charge, the servers are never happy.

Please share this with your friends and relatives and remember – don’t leave a tip if there’s a service charge on the bill.


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Rating: 5.0/5 (11 votes cast)
In the Name of Service Charge Restaurants Cheat People with Fake Compulsory Tip, 5.0 out of 5 based on 11 ratings

4 Responses to “In the Name of Service Charge Restaurants Cheat People with Fake Compulsory Tip”

  1. Rajendra Chary

    What I hate the most about service charge is that even after paying 5% or 7.5% of the bills in these restaurants – the waiter still insists on a tip because the management does not share the service charge with the waiter! It just spoils the entire going to restaurant atmosphere…

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    Rating: +1 (from 1 vote)
  2. Abhishek

    Really?? I thought service charge amount goes to government. Thank you for a great post.

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    Rating: +3 (from 3 votes)
  3. Vinod

    Almost all the restaurants in Jubilee Hills & Banjara Hills do it. Even MNC’s like Begumpet Pizzahut used to do it last year. Used to see this being done by DESI restaurants in US run by illegal immigrants from India. But top restaurants in Hyderabad doing it – shame on them! No wonder businessmen from Hyderabad are not respected.

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    Rating: +2 (from 2 votes)
  4. PD

    Its cheap and it creates a bad experience. Sadly, mostly the “elite” and “famous” restaurants do it in Hyderabad. One is learning from the other.

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    Rating: +2 (from 2 votes)


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