Like most countries, India also runs on tips. You can understand the system very well if you stay in top hotels where a majority of clients are wealthy tourists and businesspeople. In those situations, hotel employees have come to appreciate modest tips. Tipping in India is not usual in small towns and you would not be expected to tip in many instances. You should reward according to the service and as per your instincts. There are, however, some guidelines on tipping in India.
Leaving up to 10% on restaurant bill is enough for a moderate tip. You can also leave 15% for exceptional services. Some large and luxury hotels do not encourage tips to individuals but they do ask you to leave one tip before final check-out from the hotel. The management then divides the amount among whole staff. At other hotels, you can pay Rs. 20 per night to your room valet, Rs. 10 per bag to Bellboys and 10% of the bill to room service. You can tip Rs. 10 to the concierge if he gets you the taxi, or simply pay Rs. 100 at the end of the stay if he has helped you in several situations.
Train-station porters are generally paid Rs. 40 or more per bag. It actually depends on the weight they had to carry, plus Rs. 40 per 30 minutes waiting. You should always set the rate before letting him take your bags. Generally, you will see a sign with official rates, which can also help you in deciding the tip. Taxi drivers don't expect tips and neither you should. But Rs. 10-Rs.20 is enough if has to go through a lot of trouble in getting you to your destination. Though some taxi and auto-rickshaw drivers may ask Rs. 10 for extra luggage.
If you hire a car along with the driver, you should tip him Rs. 50-Rs. 100 per day, depending on the distance travelled. Tip the driver about Rs. 50 for each lunch or dinner break. If you are using him for many days, tip him a larger amount. Local guides should be tipped 10% of the total price of the package.