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Thamel - restaurants charging service charge + tax??

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Thamel - restaurants charging service charge + tax??

Having stayed in Thamel at the end of our trip in Nepal for around 6/7 days we ate out a lot as a couple in a number of restaurants in the area.

I noticed a trend in some of the restaurants when calculating the bill which struck me as strange and possibly slightly underhand.

Now I understand that restaurants can charge 10% service + 13% tax on top of the bill - I have no problem with this as long as it is stated beforehand.

However some restaurants, including fire and ice, roadhouse, new Orleans and k-too to name a few were charging tax on the service charge as well (ie. 13% on the bill AND on the 10% tax).

I.e.

In my opinion

Service Charge should = 10% of Bill

Tax should = 13% of Bill

Whereas the said restaurants were calculating

Tax = 13% of (Bill+Service Charge)

To the unsuspecting customer one would just pay this, however some items even stated on the bill that taxable amount was the bill+service charge. I did bring this up with a couple of the restaurants, and the staff didnt seem to understand my query - for the sake of a few rupees i wasn't bothered with the extra hassle. However it did seem odd - and something I'm sure isn't legal in the UK. It doesn't help when different restaurants have different policies, with some like Gaia and Phat Kath not even adding any extra onto the bill. Would be nice if someone could clarify the matter!

Bangkok, Thailand
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1. Re: Thamel - restaurants charging service charge + tax??

dude - you are asking the forum users here to calrify how restaturants in ktm rack up charges??

while i am also opposed to automatic service charge addition to the bill

just like you said, for just a matter of few rupees nobody is goging to get worked up or pull out a calculator and brush up on their math skills

becasue the difference between the two methods for a tab of $50 is 65 cents!!!!

(having said i'm not implying that food prices in resturants ktm are ok - they are not!!! with the rate they are going combined with inflation it has become very expensive)

Edited: 30 August 2013, 03:14
Sheffield, United...
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2. Re: Thamel - restaurants charging service charge + tax??

Hi Suraj

I share the mild frustration about this practice; I can't clarify, only speculate that the percentages should be applied separately to the bill. That it isn't on such a regular basis leads me to think it is knowing and deliberate. I have read opinions that the owners/managers/waiters don't understand but I think that's patronising, if not orientalist.

As a small amount to us I don't usually challenge it unless there are other discrepancies on the bill (too common in my experience).

scoodly

Kathmandu
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3. Re: Thamel - restaurants charging service charge + tax??

if the bill amount is 100, 10% SC added first which makes the bill amount 110 and now 13%VAT comes additional to make the total amount 124.3

There are several places where they include VAT on their bill amount and just charge you SC. At Nepali Tapas and Bar they charge no additional SC and VAT, all comes in their sales amount. so when the bill amount is 100 with SC and VAT included, it works somewhat like product amount is 80.45, SC 8.04, now the taxable amount is 88.49 + 13% VAT (11.50) is equals to 99.99 (100)

I dont know how complicated this is to the customer.

Edited: 01 September 2013, 06:48
Melbourne, Australia
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4. Re: Thamel - restaurants charging service charge + tax??

Each restaurant in Kathmandu is different in regards to how they put the service charge on the bill. Some include it in the price. Some add it on the final bill. Smaller, local restaurants outside of Thamel don't even have a service charge. That's all up to the restaurant. Most menus in reputable restaurants will say whether or not the service charge is added to the final bill.

I have lived in KTM for one and a half years now and my lawyer who prepares my visa and business paperwork has informed me that restaurants are not obliged to pay VAT to the government. This is just a little scam in order to get more money from the consumer. This is why some restaurants have VAT on the bill and others don't.

Personally, I don't mind paying the VAT because most of the restaurants that charge it are worth going to eat out in. So if they make a little extra money off the scam and it helps them stay in business longer, then I'm prepared to turn a blind eye and just enjoy my food. I'm not going to stop going to Roadhouse just because they scam me out of $1.50 each time I eat there. I would rather pay the extra $1.50 to ensure that they stay profitable and I can continue to go eat there.

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5. Re: Thamel - restaurants charging service charge + tax??

As I stated, I wasn't too bothered about the extra, but it is the principle - the principle being that VAT is being calculated as a % of the bill AND service charge - which is not right. I don't have an issue with paying the VAT and service charge in the first place even if it isn't legally required - as long as it worked out fairly.

Why 'scam' the consumer in the first place - a bit of clarity is better and just incorporate the extra that would be made into the price listed in the menu.

A group of people near me one night did bring this up with one of the managers of the restaurant. His reply - "I understand you, but you don't seem to understand. How do you think we pay for the water, staff wages etc." - incredibly patronising.

Again I state - I don't have a problem paying the bill with the tax and service, but don't mask the bill in a way to deceive the customer. It's patronising and can, in fact, lead to some people not coming back.

I don't doubt that some restaurateurs are making a genuine mistake - If there's confusion then fine - but in the incident above, the manager was foreign (sounded American) and clearly knew what he was doing.

Also pande328 - your example shows that there is clearly a bit of confusion in this matter! total amount should be 123 not 124.3.

Kathmandu, Nepal
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6. Re: Thamel - restaurants charging service charge + tax??

Its something serious even a small thing. Now, I am thinking if there either the taxable amount is the bill amount + SC or only bill amount? As far I know all the restaurant who are in VAT, charge 13% in bill amount + SC.

Kathmandu
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7. Re: Thamel - restaurants charging service charge + tax??

interesting discussion here,

service charge applies first as this goes to the workers, and can be considered as a part of the bill or service (goods) only measurement of the amount is 10% then your bill is ready and 13% top on that is the payable amount.

Resturants who charge vat are registered with VAT as government has some kind of criteria calculated by their annual transaction. those under transaction restaurants or local eateries do not have vat as they are not obliged by government to pay vat.

Edited: 01 October 2013, 13:16
8. Re: Thamel - restaurants charging service charge + tax??

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Edited: 01 October 2013, 20:05
9. Re: Thamel - restaurants charging service charge + tax??

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