CCPA explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
On 4 July 2022 the Central Consumer Protection Authority (CCPA) issued guidelines on service charge in hotels and restaurants (F. No. J-25/57/2022-CCPA). They say that a hotel or restaurant may not add service charge automatically or by default, may not collect it under another name, may not force a consumer to pay it, may not refuse entry or service for not paying it and may not add it to the food bill and then charge GST on the total. A consumer who is charged may ask for removal, complain to the National Consumer Helpline, approach the Consumer Commission or write to the District Collector or the CCPA.
The guidelines are issued under section 18(2)(l) of the Consumer Protection Act, 2019, which lets the CCPA issue necessary guidelines to prevent unfair trade practices and protect consumers' interest; see the article on section 18. This article takes them as amended up to 3 October 2026 (no amendment listed by the CCPA). Later amendments should be checked on the CCPA website. A service charge is not a tax; for tax questions see our GST guides.
A hotel or restaurant must not add service charge automatically or by default, must not collect it under any other name, must clearly inform the consumer that it is voluntary, optional and at the consumer's discretion, must not restrict entry or services based on its collection, and must not add it to the food bill and levy GST on the total. Charging anything beyond the menu prices and applicable taxes is treated as an unfair trade practice, and a restriction on entry is a restrictive trade practice under section 2(41) of the Act.
Consumers who have been charged and restaurants that want to review their billing can ask for consumer notice drafting support before writing to the other side.
Why the guidelines were issued: paragraphs 1 to 6
The CCPA was established under the Act to regulate violation of consumer rights, unfair trade practices and false or misleading advertisements and to promote and enforce the rights of consumers as a class (paragraph 1). Paragraph 2 records its power to issue guidelines under section 18(2)(l).
Paragraph 3 explains the concern: through many grievances registered on the National Consumer Helpline, the CCPA noticed that restaurants and hotels were levying service charge in the bill "by default", without informing consumers that paying it is voluntary and optional, and that service charge was being levied in addition to the total price of the food items on the menu and applicable taxes, "often in the guise of some other fee or charge".
Paragraph 4 sets out the pricing logic. A component of service is inherent in the price of food and beverages. Pricing covers both goods and services components. Hotels and restaurants are at liberty to fix their prices, and placing an order involves consent to pay the prices on the menu with applicable taxes. "Charging anything other than the said amount would amount to unfair trade practice under the Act."
Paragraph 5 distinguishes a tip or gratuity. It is "towards hospitality received beyond basic minimum service" and "constitutes a separate transaction between the consumer and staff", at the consumer's discretion. Only after the meal is the consumer able to judge the quality and decide whether and how much to pay. So a service charge "cannot be added in the bill involuntarily, without allowing consumers the choice or discretion to decide".
Paragraph 6 deals with entry. Any restriction of entry based on collection of service charge "amounts to a trade practice which imposes an unjustified cost on the customer by way of forcing him/her to pay service charge as a condition precedent to placing order" and falls under restrictive trade practice as defined in section 2(41) of the Act. The definitions are in the article on section 2 (other definitions).
Paragraph 7: the five rules
| Rule | What it says |
|---|---|
| (i) | No hotel or restaurant shall add service charge automatically or by default in the bill |
| (ii) | Service charge shall not be collected from consumers by any other name |
| (iii) | No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary, optional and at the consumer's discretion |
| (iv) | No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers |
| (v) | Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount |
Reading the rules together
Rules (i) and (ii) close the "default" and "other name" routes: a line called "service fee", "staff contribution" or something similar is service charge by another name if it works as one. Rule (iii) puts a positive duty on the establishment to tell the consumer that the charge is voluntary and optional. Rule (iv) bars turning away a customer who refuses it. Rule (v) is about how the charge is billed: it cannot be merged into the food bill so that GST is levied on the total. This guideline does not deal with tax rates or tax law; for those see our GST guides.
An invented example: Spice Garden adds a "service fee" of a fixed percentage of the bill to every order, prints "service charge compulsory" at the door and refuses entry to a family that objects. The default addition breaks rule (i), the changed name breaks rule (ii), the compulsion breaks rule (iii), and the refusal of entry breaks rule (iv).
Paragraph 8: the 2017 guidelines
The guidelines "shall be in addition to and not in derogation of" the guidelines dated 21.04.2017 published by the Department of Consumer Affairs. The 2017 guidelines are named only; they are separate instruments.
Paragraph 9: what a consumer can do
If a consumer finds that a hotel or restaurant is levying service charge in violation of the guidelines, the consumer may:
- make a request to the hotel or restaurant to remove the service charge from the bill amount;
- lodge a complaint on the National Consumer Helpline (NCH), which works as an alternate dispute redressal mechanism at the pre-litigation level, by calling 1915 or through the NCH mobile app;
- file a complaint against unfair trade practice with the Consumer Commission, which can also be filed electronically through the e-daakhil portal for speedy and effective redressal; or
- submit a complaint to the District Collector of the district for investigation and subsequent proceeding by the CCPA; the complaint may also be sent to the CCPA by e-mail at com-ccpa@nic.in.
The options are alternatives and a consumer may choose any of them. The guidelines give no further steps for the portal, and this article adds none. For the Act's provisions on complaints to the District Collector and the authorities, see the article on sections 16 and 17. For the National Consumer Helpline in general, see the post on the National Consumer Helpline.
What restaurants should check
- Remove any pre-printed or default service charge from bills and billing software.
- Check for lines under other names that work as a service charge.
- If a charge is offered at all, make it a voluntary choice for the consumer, clearly explained.
- Do not refuse entry or service for refusing it.
- Do not add any charge to the food bill and then levy tax on the total.
- Display prices in the menu on which the consumer can rely.
The bill particulars that every bill must show are covered in the article on rule 5 of the General Rules. For food-sector practices more widely, see the post on unfair trade practices in the food business.
Consequences
The Act's provisions on unfair trade practices and CCPA directions apply; see the Act's articles above. These guidelines name no penalty and this article quotes none.
Need help with a service charge dispute?
If a restaurant has charged service charge in breach of these guidelines, a written notice is often the quickest first step. Our consumer notice drafting service can prepare a clear notice citing the guidelines and the bill, and set out the next step if the charge is not removed.
Key takeaways
- Service charge cannot be added automatically or by default, or collected by any other name.
- The establishment must clearly inform the consumer that it is voluntary, optional and at the consumer's discretion.
- No restriction on entry or services may be based on its collection.
- It cannot be added to the food bill with GST levied on the total.
- A consumer may ask for removal, call the National Consumer Helpline, complain to the Consumer Commission or write to the District Collector or the CCPA.
- The guidelines are in addition to the 2017 guidelines of the Department of Consumer Affairs.
Read next
- Rule 5 of the General Rules: what every invoice, bill or cash memo must show
- Sections 16–17: District Collector and complaints to authorities
- National Consumer Helpline
- Unfair trade practices in the food business
Disclaimer: Based on the rules, regulations and guidelines named above as published in the Gazette of India or on the CCPA website, with the amending notifications the article names (consulted on 3 October 2026). Later amendments, the Consumer Protection Act, 2019 provisions referred to, State rules and CCPA advisories should be checked. This article is general information, not legal advice; check the official text before acting.