Service Charges: How we all spend crores annually for nothing



By NewsGram Staff Writer

In the year 2013, people paid Rs 1.33 crores to coffee retail giant Cafe Coffee day for nothing in particular.

In the financial year 2013-14, according to a website, the total revenue of Coffee Day Global Limited, was approximately Rs. 44.47 crores. Places like Cafe Coffee Day have something called ‘service charge’, which is a voluntary charge on the part of the customer, meaning, that if one doesn’t wish to pay this charge, they can refuse to do so. This charge is separate from the VAT (12.50%) and the Service Tax (5.600%).

On a bill amounting to Rs. 379 in total, they charge Rs. 11.37 as service charge, which roughly adds up to 3% of the net purchase.


If they charge 3% as service charges from every customer, then roughly, 3% of their total revenue would be comprising of just these service charges, which will add up to a whopping Rs. 1.33 crores(approx) in total (for the year 2013-14). This means that last year, people gave away Rs.1.33 crores just like that to the coffee retail company!

Though these charges are voluntary on the part of the customer, rarely does a customer realize that they are being charged for the service also, apart from the usual VAT and Service Tax which they have to pay anyway.

The retail outlets simply put it on the bills of the customers and unless the customer has knowledge about it, they won’t ask for service charges to be returned.

The coffee shop chain is especially frequented by people who are in a rush, apart from the youngsters. And of course, due to the paucity of time, people in a rush always end up paying what the bill totals to, without even looking at the details of the bill.

As an aware customer, we should always look at all the bills we get carefully.

Who knows, we might end up saving a few bucks if we are lucky. At the end of the day, even the smallest of savings do matter.