GST On Credit Cards: Things You Need To Know

GST On Credit Cards: Things You Need To Know Dr. Hansmukh Adhia, Revenue Secretary and also the main person behind the unveiling of GST, has

CA Deepak Gupta

Jul 26, 2017

Last update on Jul 26, 2017

GST On Credit Cards: Things You Need To Know Dr. Hansmukh Adhia, Revenue Secretary and also the main person behind the unveiling of GST, has strongly condemned the circulation of rumours on social media about the new tax regime. He dispelled all the concerns that if someone makes the payment of utility bills by credit cards, then the card owner will be paying GST twice. He added that this message is fake and he has also requested the people not to recirculate this message any further. It was on July 1, GST was introduced in India containing a number of state and central taxes, including service and excise tax. Before GST arrived, there was no service tax charged if someone has made the payments for the utility bills through his/her credit card. In this case, the merchant paid a small amount known as merchant discount rate to the bank which offers both debit and credit card services. Service tax was only charged on the discount rate of the merchant and it was borne solely by the merchant only. Usually, the merchant never asks for a separate charge from the public to accept payment via credit cards. In fact, some utility providers offer attractive discounts on the bills if payments are made online as this helps in reducing the hassle of handling the cash and collection costs. GST On Credit Cards: Things You Need To Know

Under GST, banking and financial services come under 18% bracket as compared to an earlier regime of 15% service tax. In addition, mobile bills and broadband will also become dearer. At the same time, it is worth mentioning here that EMIs for the personal loan, home loan, and auto loan will not increase. All these loans dont have service tax levied on them, therefore they wont be taxable under GST. GST and credit card fees Well, GST didnt affect how people use their credit cards but the card annual fees is directly affected. As per new GST rules, if you are having a credit card, you will be charged a 6% Goods and Services Tax as an annual fee on your card. However, there is a good news, you no longer have to pay the MYR 50 service tax. Choose a credit card with an annual fee waiver, this way you dont have to pay 6% GST on annual fees. You can also counterbalance the 6% tax using both your loyalty points and rebates. Earlier, an MYR 50 tax was charged on the main cardholder and MYR 25 for each additional cardholder. Where Will 18% Rate Apply Talking about 18% GST tax rate, it will be applied if you have a revolving credit to pay. If you have constantly defaulted in the bill payment, it can lead you to such situation. The tax will be based on the complete interest gathered on the same. This Article has been shared by Ankita Dixit. Hi, my name is Ankita Dixit, I am 27 and I am a professional writer. I started writing from young age and most of my writing skills and knowledge are self taught. Currently, I amworking as a professional writer at Paisa.co. I have write on various topics includingtravel, motivation, finance, technology, credit cards, insurance and entrepreneurship etc.

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CA Deepak Gupta

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