Wednesday, 11 January 2017

The Tipping Point- Taxing Times



image courtesy shutterstock


Eating out? Think again. When living on a shoestring budget, fine dine with its taxes and charges translates into an evening of whine and dine. Service industry charging for the service; ridiculous, one would think. But that’s exactly what happens when you eat out. In addition to the food bill, you pay for the service charge, service tax, Krishi Kalyan Cess, the Swachh Bharat Tax, etc. What happens next when GST kicks in? This is why the roadside pani puri stall rocks. With no cash, opt for a roadside vendor who doesn’t believe in service charge, is not going to expect any tips and wont levy any cess/tax on you. He is the one ready with his Paytm account. He probably doesn’t hire any staff and serves with love straight from his own (germ-free?) hands. Balance yourself on his rickety stool or brave the whole meal standing and ‘dining’.

The diktat

The recent Central government advisory to restaurants on service charge has kicked up a fiery debate. It states that service charge is optional and the same has to be communicated by the eatery explicitly to customers. Customers dissatisfied with the service can have it waived off. They can’t be forced to pay service charge. Service charge is expressed as a fixed percentage in the bill and is usually printed in menus. But not every restaurant follows the norm of levying it only on 40% of the food bill.  Also, the amount is arbitrary and in some cases, goes up to 20%! Arguing about the bill with the restaurant is so awkward that one is left red-faced but helpless.  The thick-skinned may enquire about the breakup and the innumerable costs, but usually a smooth-talking and firm ‘manager’ dissuades the query and the querist. Suddenly the food leaves a bad taste in the mouth. Now since the union government has come to the consumer’s rescue, service charge will be optional. Such blanket costs will no longer be billed to hapless customers. But on the flipside, these will be included in the item cost itself making the food dearer. Also, those in the serving industry will need more permanent salaries. They cannot afford to rely on service charge or tips.

On deeper thought, the restaurant will have to take its game to a higher level. Better service will attract more customers which in turn make its operations profitable. While breaking even is important for the restaurants, clarity and transparency about the costs is the customer’s prerogative.

To tip or not to tip 


Considering that loose change is now ever so dear, parting with it even for tipping raises eyebrows. Since world over tipping is customary more so being an art in itself, India could take a leaf out of the global book and tip generously for good service. Else the eateries will resort to inflated food bills.

On a serious note, one wonders, do any of these self-righteous restaurants care two-hoots about fire safety norms, or for that matter food safety and health of their patrons? What percentage of the service charge actually goes to the staff? Does the eatery care for cleanliness in the kitchen? How often are they audited? Or is grease and grime part of the great taste and is ‘on the house’?  what about service charge for self –service joints, take-aways and home deliveries? 

Smart tip to a hungry junta- Until more clarity emerges, check your bill before paying and definitely don’t pay for bad service.

Harini Shrinivasan