Tips at Restaurants

[sidvee]

Esteemed Members,
I have a question that I have asked a few people and they could not explain clearly to me.
I have noticed that in Hyderabad and Bangalore most restaurants charge:
1. 14.5% vat (on food only)
2. 10% service charge
3. 4.95% service tax
Total: 29.45% tax over and above prices shown in menu
Now I can understand that vat and service tax are Govt. mandated, but the service charge is nothing but tips, is it not? So I should be able to walk away without paying any tips right? Please advise. Also can restaurants force patrons to pay 10% tips, if the service sucks? and how much of this is being shared with waiters?
BTW Chennai is significantly less, not sure how much though, last time I saw a very small amount for tax. Not sure what it is in other parts of the country. Please contribute. In summary with all these taxes it is quite expensive to eat out, is it not?
Cheers,
Sid

 

[reubensm]

Back here in Trivandrum, since of late there are many niche restaurants coming up. The practice of charging service charges was traditionally only for advanced bookings or using the airconditioned cabins. Tips are paid (not mandatory) in cash. At the star hotel restaurants, one has the option to specify the amount intended for tip (again not mandatory) when paying the bill.

The restaurants in Bangalore/Hyderabad may be using this as an incentive ploy for the staff. The more customers you attend to, the more your tip. It would also encourage them to up-sell, again, the higher the bill, the more your tip

 

[stevieboy]

Hi Sidvee,

Yes, a service charge is in lieu of a tip. So technically you should not be tipping. Though of course if you go there often and know the people diner discretion applies.

Regards

 

[sidvee]

Thanks Guys,
So far I am understanding that after service charge tips are optional. Well if the service charge is around Rs. 200-300, I usually will leave 50-100 in cash, so hopefully that should cover it.
Cheers,
Sid

 

[panditji]

It is the same in the North here...everyone charges 10% service charge and therefore I do not pay tips...The higher prices that we pay in fancy restaurants are due to the service which we expect to be given and not because the raw materials cost higher...So they are basically charging more money from us on which we have to pay a service tax as well......so absolutely no tips...

 

[sidvee]

The restaurants in Bangalore/Hyderabad may be using this as an incentive ploy for the staff. The more customers you attend to, the more your tip. It would also encourage them to up-sell, again, the higher the bill, the more your tip

I doubt if this is case though, my thinking is that the management keeps the tips for itself and and the end of the month gives some pre arranged amount, otherwise waiters, would be making a ton of money. Some of the places I go to, in about an hour or two the waiter can make Rs.200-300 on a Rs. 3000 bill, so in a 8 hour day, 25 days a month he will make Rs 20k-30k just on tips! Anyways just my thinking, not sure what really happens, all I know it is quite expensive to eat out, especially if you want to have a couple of drinks or wine as well prior/with your meal, at-least in Hyderabad & Bangalore.
Cheers,
Sid

 

[just4kix]

How the management distributes the service charge is not my concern. If I see "service charge" in the bill, I refuse to tip, unless it is really small.

 

[shuv]

The service charge levied goes to the owner's pocket. Tips left at the table are accumulated and divided among staff at the end of every day. Sometimes at pubs/clubs, tips cover unpaid bills.

When given directly to the serving staff, then its not divided.

Regardless of service charge, if happy with the service I always leave tips.

 

[rikhav]

Same here in mumbai

Ten percent service charges are levied by all good restaurants and coffee shops

 

[madbullram]

Most places when service charge is added to bill, its always the owner and manager who pocket the money. What I usually do, if I see "Service Charge 10%", when I pay the bill, I ask the waiter to ask the owner or Manager if they will give the service charge to the waiter. The reason i do this is:

1. It makes the waiter realise that the owner is charging extra for his service and hence his tip is not there, so he or see makes an informed choice of working there.
2. It also helps the waiter understand why i have not tipped him/her
3. It also makes the management understand customers are not blind and hopefully with waiters also asking, they will slowly change the practice.

Also, when i am not happy with service, I deny paying service charage and make sure its removed from my bill. It usually takes 10 mins of arguing etc but I do bcos a small change can help, seeing me some of my friends have started asking WHY service charge.

 

[sidvee]

Interesting post's, especially madbullram's. I wonder if this pratice is known to Govt., because as I understand taxation is different on tips or has the Govt. been taken care of like everything else.
Cheers,
Sid

 

[madbullram]

Interesting post's, especially madbullram's. I wonder if this pratice is known to Govt., because as I understand taxation is different on tips or has the Govt. been taken care of like everything else.
Cheers,
Sid

Government cannot abolish this. Its charged by the onwer for the service he has provided, you have the right to deny it. if the owner is not willing to remove it when you ask , you can then file a case against him.

So in principal, its not illegal to charge service tax at the same time it is not mandatory like Sales tax or VAT for you to pay. The decision is with the customer.

But I always urge everone to tell the waiter so that poor chap knows he/she is also being cheated by his/her owner (assumign the owner does not share it)

 

[panditji]

As and when the service charge is levied, there is an additional service tax which goes to the government...so it is an extra income to the government over and above the VAT which we are already paying...The government will never abolish the practice as it will be kicking it's own additional income stream....

 

[sidvee]

Thanks Madbullram & Panditji, so I am sure eating out is considered a practice of the affluent just like flying, so Govt. is happy taxing the crap out of it - like when it increased service tax on a/c restaurants. Oh well, what's new:lol:.
Anyways from now on I am going to be very strict on the amount of tip I leave, especially if there is an automatic 10% service charge.
Cheers,
Sid

 

[GeorgeO]

I agree with earlier posts about thw 10% service charge if it is included in the bill.

In the US at the upper level tips are 17-18%, so people may pay an extra 8% tip if there is a service charge-usually for groups fo 6 or more.But their (to me unacceptable) rationale is that waiters are paid peanuts and need to make their living from tips!

 

[rikhi22s]

Here is an interesting read on the subject:

Service charge in restaurants is illegal - Economic Times

Thank you,
Rikhi

 

[rikhi22s]

Here is another one that everyone must read:

Service Charges Billing in Restaurants Misleading - Facts Analysis-HoaxOrFact.com Analysis.

Thanks !

 

[Rupam]

I follow just one rule : If I'm happy with the waiter (or waitress) I let him/ her keep a good part of the change he brings back for me from the counter.
That Service Charge 10% never reaches the waiter. I have some friends in restaurant, they know.

 

[sidvee]

Here is an interesting read on the subject:

Service charge in restaurants is illegal - Economic Times

Thank you,
Rikhi

Very interesting Rikhi, now the plot thickens:lol:. Quoting from this article:
"We allow them to rob us. That is the answer to this query.
This also creates an unnecessary subsidy which I am sure most restaurants do not declare in their books"

So clearly as I suspected, perhaps many restaurants, do not declare this service charge during tax time and it is money forcibly charged from the patrons. Wonder why the Govt. does not crack down on this, especially when it is not getting a lot of the money (surely 10% of all the bills from restaurants which extort this amount, will add up to a huge sum), well unless, better to leave it unsaid, God knows who is monitoring these posts US NSA or Indian RAW
Cheers,
Sid

 

[jagdish_p]

My take on this:
We select a restuarant based on the overall experience and the total cost - I am sure we do not go based on the price printed on the menu.

I am sure that the service Charge levied goes into the management's pocket and is not in lieu of the tip.

A tip is given voluntarily in appreciation of service renedered and also to meet the waiters expectation. So I leave a tip even when service charge is levied.

The above is in contrast to US where a tip is not expected when ever a service charge is levied ( about 20%)