Loan facility to credit card holder not a credit card service, exempt from GST

Last updated: 04 August 2023
Quick Summary
The Calcutta High Court has ruled that a loan facility offered exclusively to credit card holders is not a credit card service and is therefore exempt from Goods and Services Tax (GST). The court found that the loan, advanced separately and repaid via EMI, constituted a distinct transaction from the credit card facility itself, with credit card holding merely being an eligibility criterion. Consequently, the bank was directed to refund the GST wrongly collected on the loan interest.

Court :
Calcutta High Court

Brief :
The Hon'ble Calcutta High Court in Ramesh Kumar Patodia v. City Bank N.A. and Ors. [APO 10/2023 with WPO 547/2019 dated July 25, 2023] held that the loan facility availed by a credit card holder, where being a credit card holder is a condition for eligibility, is not considered a credit card service. Instead, it is treated as a standard loan which is exempt under GST. Directed the bank to refund the GST collected from the assessee.

Citation :
APO 10/2023 with WPO 547/2019 dated July 25, 2023

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Bimal Jain
Published in GST
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