Why do restaurants charge customer service charge?

Originally posted by : thelawassist
	Why do restaurants charge Customer Service charge? Is it compulsory to pay service charge?

According to Law, they can charge Service Tax only on 40% of Bill Amount. So effectively it is 5.6%. Also a very important thing is they can charge Service Tax only if the restaurant is centrally air conditioned or heated.

The problem here is that most of the customers are taxed at the full bill and not on the 40% of the bill as directed. To make things simple, service tax should be 40% of the total bill. Hence whenever you see service tax on the total bill exceeding about 5%, you can question it.

Thanks for replying.