Service tax - credit card

anandh raghavan (Member) (359 Points)

26 August 2011  

I have applied for a credit card where there is a cash back offer of 2.5% on the purchase. As service tax is applicable on the credit card services, will i end up paying more than what i has spent . For ex: total purchase is for 100 Cash back is 2.50 Service Tax is 10.30 ( 10.30% on Rs 100) . So will my payout be 100-2.50+10.3 =107.8

Please advice.