What is Service Charge?
A service charge is a percentage or fixed amount a restaurant or service business adds to the bill for service, separate from the price of food and from tax.
Updated
Meaning
English
A service charge is a percentage or fixed amount a restaurant or service business adds to the bill for service, separate from the price of food and from tax.
Roman Urdu
Service charge woh percentage ya fixed raqam hai jo restaurant ya service karobar bill par service ke liye lagata hai, khane ki qeemat aur tax se alag.
Also called service fee, SC.
Example
A restaurant adds a 5% service charge to dine-in bills only. A 4,000 rupee dinner shows 200 rupees service charge, then sales tax on services is worked out as the provincial rules require.
How it works
Service charges are common in sit-down restaurants and some salons. The menu or a notice at the entrance should say clearly whether a service charge applies and to which orders, because customers often confuse it with a tip or with tax. Whether staff receive the service charge is the business's own policy, so be clear with staff too.
How a service charge is taxed depends on the province and the business's registration, so registered restaurants should confirm the treatment with their provincial revenue authority or tax adviser.
In Nafaa
An open restaurant order in Nafaa can carry a service charge percentage along with tax, discount, packing, delivery and tip. Service businesses can add service charge lines at the counter, and the profit report and reports centre show service charges.
Related terms
- Split Bill
Splitting a bill means dividing one table's order into separate bills, by item or by equal shares, so each guest pays their own part.
- Sales Tax on Services
Sales tax on services is the tax provinces charge on services such as restaurants, salons, gyms and courier work, collected by PRA, SRB, KPRA and BRA under provincial laws.