Business payments through Credit Card

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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)

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.

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.

What was decision taken

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