One is constantly peeved at all kinds of taxes that almost double your bill after a dining experience. The government on Monday in a clarification sought from the Hotels’ Association of India over service charge declared that the additional charge levied by the eateries and restaurants as a form of ‘tip’ is all set to become optional. However, most of the consumers are still unclear about how service charge is different from service tax?

The service charge is taken by a restaurant for offering its services to you. It is not a tax and is not levied in any form by the government. This addition on the bills is purely charged by the restaurants and they are free to charge any amount as there are no set guidelines. But this usually varies from 5-20 per cent.

It is usually equivalent to the tip that you want to pay the service providers and there is no need to pay a separate tip. Also, this amount has to be paid regardless of not being satisfied with the service or the food.
Service tax, on the other hand is a tax levied by the government. This is 14 per cent and is payable on 40 per cent of your total bill. The bill is inclusive of food, drinks, service charge and other services such as the ambience.

Till the next time you visit a restaurant, you should be able to decode and understand your bill.