Service charges, taxes and Facebook hoaxes

Every time I dined out, which is pretty much every weekend, I ended up paying ~30% extra on items, which I did not fully understand. There were VAT, service charges, service tax and on top there is a tip! 30% is a considerable amount and can easily buy me a couple of coveted dishes, for which I generally have ‘reserve’ apatite even after a full meal. Nevertheless, I paid it every time and returned hungrily.

Recently came across a Facebook post telling me what I did was wrong! The full content of the Facebook post is pasted bottom of this post. It claimed India restaurants charge service taxes on top of total bill amount rather than just service charges. This is that hallelujah moment, where you realize you’ve been cheated but you are not alone. Generally, I don’t believe Facebook posts, but this post is telling me just what I wanted to hear.

So basically, so far, this is what I understood:

  • Service charge is optional
  • Service tax is on service charge rather than the full amount.

Next first thing I tried is one of those fact-checking sites, like this one. Unfortunately, Hoax or Fact site declares it FACT! But if you see the explanation is about service charges rather than service tax itself.

All this joy was short-lived when I read what I did not want to hear. Apparently, the bill was right, they were according to law, which includes “don’t dine outside”. Read this for complete understanding on service tax – Service Tax in Restaurants – What the law really says!

  1. Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity, at a restaurant – 40 %
  2. Service portion in outdoor catering wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of such outdoor catering – 60 %

Let me summarize

  1. Service tax and service charges are two mutually exclusive overheads on your bill
  2. Service charges are ‘almost’ mandatory tips, will be distributed with all employees of the restaurant (technically).
  3. The restaurant has an obligation to let you know that there will be service charges, even before you dine/order. In case no such display or abysmal service, you can refuse to pay that (technically)
  4. Service tax, on the other hand, goes directly to the government, will be 40/60% either on top of the total food bill, which includes VAT.
  5. Never trust Facebook post on first look.

Happy dining out with your inflated bills!

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Interesting. I find restaurant bills often so confusing. I just give up and pay the amount shown n the bottom line. Perhaps we shouldn’t.

Incidentally, I also resent the inclusion of Service Charges in restaurant bills, because it assumes that I was satisfied with the service. Just a matter of principle. Service Charge should be something I leave behind at my personal discretion. I recently demanded that the service charge be removed as the service was non-existent. After a short – very short! – Discussion, it was removed. About Service Tax….. Be aware

service tax
service tax

This happened at the restaurant. Let me explain. We had been to several restaurants recently. I observed that “service tax” was being misused in the way it was being charged to customers.

Let me give an example.
– – – – – – – – – – – – – – – – – – –
Food and Beverage = Rs. 1000.00
Service Charges @ 10% = Rs. 100.00
Service Tax @ 4.94% = Rs. 54.34 (on F&B + Service Charges)
VAT @14.5% = Rs. 145.00
Total = Rs. 1299.34
As per the definition – “Service Tax can be charged ONLY for the services provided to the customer”.

Now, see what is happening here in the above example. Service Tax should be charged only on the Service Charge amount i.e Rs.100 ONLY, and NOT on the entire amount (1000+100). In this example, the customer should be charged only Rs 4.94, whereas he has been charged Rs. 49.00 extra. Where does this money go? Only the restaurant owner and the chartered accountants who work for them know.

• So, I have started asking them the questions – and am surprised to see the reaction from famous restaurants. Either they say: “Sir we cannot change the format of the bill – so , we will recalculate and tell you the revised amount. You may pay only that.”


• “Sir, you do not need to pay the Service Tax amount itself”!! I now have 3 to 4 restaurant bills, but for which I have paid only the service tax on the service charge and NOT on the total amount.

Every bill MUST carry the TIN number and Service Tax Number, if they charge it. So . . . , I ask for the Service tax number if it is not available in the receipt that they provide.

As we cannot go to any government official and ask them to get this right – because of our system. Please remember – we cannot change any political leader – but we can change ourselves. If we change ourselves – things will change. Please do share this with every one of your friends and known people. Ask for the right tax calculation and Pay only the tax which is supposed to be paid. Verify every bill and receipt that you make payment on.”Please share if you think its worth”

My ratings : Indian Restaurants in London

There are hundreds of Indian restaurants across London, serving Indian food for curry lovers. This massive number is kind of obvious, since British national food is Tikka Masala (unofficially) and curry is ‘party food’, just like we have pizza in India. But the problem is, not many of these restaurants provide authentic taste; they customise their dishes for the west with less spice in them, sometimes irritatingly sweetish.[tweetmeme]

As Indian, I sometimes wonder if the curries served in Central London are really Indian or ‘Thai’. Anyways, my point is, if you are new to Indian food and would like to try; Central London is not a place for you. They are expensive, customised and does not even taste Indian. You need to find a place in east London for south Indian style food and west London for north Indian kind of curries. Thumb rule is, North Indian restaurant is judged by the “Daal” it serves, and South Indian by its “Sambhar”. I am yet to explore few more Indian-ish areas before I can write review about curries. But South Indian is ready right away.

photo courtesy

East London is a pilgrimage for south Indians, for food and temples. If you miss T-Nagaar Chennai, for its Idly-Dosa or full meals, you will have to come to east – East ham, Upton Park or Ilford. In this context, I would like to provide some web presence on where to eat with special emphasis on what is “must miss”. I feel I should offer my help to people who refer to internet for good Indian restaurants in London, south Indian ones.

Vasanta Bhavan 9/10: I would rate this top amongst all the restaurants I have ever eaten in London. This is first place I would visit when my gf denies me food for the night. This is an authentic south Indian vegetarian restaurant, located just 20 meters from East Ham underground station. Food here is excellent, so is their service. Idly-Vada with Coconut Chutney is as good and fresh as if they were just imported! North Indian and Chinese dishes are also worth try. There is a scope of improvement on Masala they provide with Dosa. To summarize, food is worth your money.

Ananthapuri 8/10: This is a newly opened Kerala restaurant.  I rate it very high, since they have classic Kerala style taste in all of their dishes. This is also located near East Ham tube station; You have more options here with Kerala specials, also booze to go with. A boiled rice meal is a speciality (must try), for those who are from Kerala or coastal Karnataka.

Taste of India 7/10: This restaurant represents typical Indian style food in both South Indian and North Indian dishes. Good service, neat and clean, value for money. Non-vegetarian food is their speciality.

Chennai Dosa 4:/10: This is a chain of restaurants spread across London (I guess). I have tried them in East and South London as well. I am not impressed. Lunch and breakfast buffet is worth a try, where you taste almost every item they offer. Taste of south Indian food is very average and north Indian dishes are very bad. Biggest problem with this chain of restaurant is service, they suck! They look unhygienic.

Saravana Bhavan 5/10: This is most hyped restaurants among all. But the fact is, they are not as good as others I have listed here. South Indian food is average; north Indian/Chinese food is very bad. This is the only place where I have seen strangely tasting greenish yellow Gobi Manchurian (which BTW discouraged me to visit here further).  Contrary to my review this place is always crowded and will continue to be so, only because the people aren’t well informed about the facts or they go by name.

Chola Dosa 4/10: Go here only for chicken/ lamb dishes, they seem to be fantastic. As a vegetarian myself, I haven’t tried non-veg dishes, but I have collected this information from reliable resources (My gf is a carnivore). Vegetarian items here are pathetic. I have tried them personally and I do not want you to repeat the mistakes I have done.

Other honourable mentions

Udaya 7/10: Fantastic service and authentic Kerala taste, little isolated.

Hyderabad Biriyani 6/10: Overpriced but authentic Andhra style.

Tattakuda 5/10: Kerala style restaurant. Good but there is nothing much they can offer with frozen fishes.

… to be continued.