CRITERIA OF IGST RATE BANK CREDIT CARD

The Goods and Services Tax (GST) on credit card services in India is 18%. To address your specific questions regarding how and when it is applied:

Is it a "one-time" or "monthly" tax?

It is not a "monthly tax" in the sense of a recurring subscripttion fee; rather, it is applied whenever a taxable service is rendered by the bank.

• Transaction-based: If you incur a fee (such as a late payment fee, annual membership fee, cash advance fee, or a processing fee for EMI conversion), the 18% GST is levied on that specific fee at the time it is charged to your account.

• Visibility: Because many credit card fees (like interest on unpaid balances or EMI processing charges) are generated and billed on your monthly statement, the GST on those services will appear on that same monthly bill. If you don't incur any fees in a given month, you will not see any GST charges for that month.

Key points to remember:

• Not on the full bill: GST is not charged on your total outstanding balance or your purchase amounts. It is only charged on the "service" component, such as:

  • Annual/Joining Fees: The tax is applied to the fee itself.

  • Interest: GST is applicable on the interest charged on credit cards (unlike standard loans, which are often exempt).

  • Late Payment Fees: These are considered service charges and attract 18% GST.

  • EMI Processing/Conversion Fees: If you convert a purchase into EMI, the processing fee and the interest component attract 18% GST.

  • Other Charges: Fees for card replacement, foreign currency markups, or cash advances also attract 18% GST.

• No Double Taxation: There is no "double taxation" on standard utility bill payments. The GST is only levied on the service fees or convenience fees, not on the value of the utility bill itself.

• Input Tax Credit (ITC): If you are a GST-registered business and use your credit card for business-related expenses, you may be eligible to claim Input Tax Credit on the GST paid for these banking services.

Summary: GST of 18% is applied to all service fees and interest charged by your bank on your credit card. It is not a fixed monthly recurring tax; it is triggered only when a specific fee or interest charge is applied to your account, typically appearing on the monthly statement in which that fee is levied.