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Business payments through Credit Card

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H Jain

49 Points Posted on 20 December 2022

Dear Sir or Madam,

We have a small partnership firm with less than 10 employees. Can we pay the business expenses like Salary of employee / vehicle EMI (total 1.5L/month) through personal credit card of my wife (not a partner in firm & her personal income less then 10L) & pay off credit card dues from firm's bank account every month.

This is just to meet spend criteria & earn reward points on the credit card.

Replies (3)

Quick Summary

This discussion explores the feasibility of using a personal credit card for business expenses like salaries and EMIs, aiming to meet spending criteria and earn reward points. The primary concern raised is the potential GST implications, as the tax office might view the company paying the personal credit card bill as consideration for a supply. While a 'pure agent' argument could be made, it may lead to litigation. Professional tax advice is strongly recommended.

Manoj BG

Tax Professional and in Service

1795 Points Posted on 20 December 2022

Since she is neither partner nor employee of your firm, transaction would get GST applicable. GST office may consider payment of her credit card bill by company as consideration for supply and may issue SCN as to why same would not be chargeable to GST. Of course, this can circumvent by considering transaction as pure agent service, however may subject to litigation. Advisable to take detailed opinion from tax consultants.

H Jain

49 Points Posted on 10 February 2023

Thanks for your reply Sir. My CA advises me to transfer the amount to her bank on the same day from my co. current a/c to her savings a/c from which the credit card bill will be paid.