Restaurant Workers: Should Service Charges Affect Your Paid Leave and Taxes?

I work in a restaurant. Is it right that my service charge comes in my salary slip? If I go on paid leave, can the service charge be deducted or not? Also, does the service charge come under tax levy?

Dear Mohit,

The service charge is not a tip. Owners of restaurants or hotels collect it for the maintenance of the crockery, cutlery, and other items. Part of the service charge is diverted to employees who actually provided service.

There is no fixed rule for owners to collect the specific percentage of bills as a service charge. Generally, it varies from 5% to 10%.

Owners of restaurants or hotels collect the service charge from the bill. Therefore, it is construed as their income. While disbursing part of this income to the employees, this has to be reflected somewhere. Hence, the payslip is the right means to show the disbursement of the service charge.

The service charge that you earn through a payslip is your income; hence, it is taxable. Service charge is distributed as per the exact attendance, i.e., your weekly off or any other absence is excluded; hence, generally, you should not get a service charge for your leave period. However, service charge collection and further distribution is a convention. There is no rule per se.

Ok...

Dinesh V Divekar
+91-9900155394

Hi, we would like to distribute the service charge among the staff. Can anybody help me provide the Excel format with points or grades?