Service Charge vs GST

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Upon GST implementation, Malaysians have taken their bills seriously and perhaps now noticed there is a service charge on their bills. Ironically, many Malaysians do not know that this charge was implemented long ago and has taken rants on social media.

Service Charge has long been implemented by Restaurants, Hotels and Industry which provides services to clients. The workers of these industries usually have very low salary or living with minimum wages. Malaysia which is not a particularly tip friendly country as compared to United States where it is ethically required to tip their waiters around 15% to 25% of the dine value. Service Charge was introduced as a mean to supplement these services workers with extra income. A worker’s salary is very dependent on income from Service Charge. In a lot of cases, Service Charge contributes to at least 30% of the workers income.

 

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Service Charge is not compulsory and its dependent on premises basis. Some restaurants may charge from 5% to 10% This charge is not implemented by the government and is typically implemented restaurants and hotels

Legally, a client is not bounded to pay any Service Charge, however many restaurants stated their service charges on menus or notices before hand. This would be important to let a client know that he or she will be subjected to Service Charge based on the total amount of food ordered.

Service Charge vs GST

Service Charge is altogether a different item compared to GST (Goods and Services Tax). It should not be compared with Goods and Services Tax.

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How does GST effects Service Charge

As of GST introduction, the Service Charge is also subjected to 6% GST besides the foods ordered.