GST Impact on Credit Cards – Forget 15% Service Tax, Adapt to 18% GST Rate
Last Updated : June 6, 2021, 9:27 p.m.
The GST is out and so are the queries related to many products and services which also include the concerns of credit card shoppers. Don’t be worried with the removal of 15% service tax rate with 18% GST rate. The normal transactions will not be under the purview of such taxes. So, if you are paying the bills on time, there is no need to panic. So, shop freely as you were doing earlier.
Where Will 18% Rate Apply?
The 18% GST tax rate will apply to those having a revolving credit to pay. The constant default in payment of the bills can lead to such a situation. The tax will be based on the overall interest accruing on the same.
Service tax was mainly applicable on the interest charged on the transactions made by the cards in the pre-GST era. The interest rate on the card normally ranges from 2%-3.5% across banks in India.
Table Showing the Impact of GST on Credit Card Transactions
| Particulars | Amount (In ₹) | 15% Tax Before GST (In ₹) | 18% Tax After GST (In ₹) |
|---|---|---|---|
| Interest | 1000 | ||
| Late Payment Fee | 700 | 255 | 306 |
| Total Amount | 1700 |
Note- (The calculation is made on an assumption of total interest of ₹1,000 and a late payment fee of 700. So, if you pay the dues on time, that 700 bucks will be out of the equation when it comes to tax calculation.)
Top Selling Credit Card Issuers in India
You can apply for a credit card at some of the following institutions which rule the roost in India’s credit card space.
- HDFC Bank
- State Bank of India (SBI)
- ICICI Bank
- Axis Bank
- Citibank
- American Express
HDFC Credit Card
HDFC Bank sits at the top of the financial institutions issuing credit cards in India. Around 87 lakh subscribers are enjoying shopping, dining, travelling and many more privileges with HDFC credit cards . With a wide range of discounts, rewards and innovative shopping offers, these cards enable you to live life with freedom. The credit cards, which you can look to apply for, comprise HDFC Regalia Card, Jet Privilege HDFC Bank World, Platinum Times Card, etc.
SBI Credit Card
SBI holds the second position by taking its customer base to 46.8 lakhs. Some of the top selling SBI credit cards include SimplyClick SBI Card, SimplySave SBI Card, SBI Unnati Card, among others. With these cards on your hand, your shopping experience is set to breach the level of convenience by letting you earn a host of discounts & rewards while allowing you to shop at numerous outlets.
ICICI Credit Card
At third, there is ICICI Bank with a subscriber base of around 42 lakhs. From airline cards to fuel cards and from gemstone cards to contactless cards, the bank is catering to every single need of the customers. So, find from the group of cards that best match your requirements. Among a glossary of cards, you can apply for ICICI Bank Coral Credit Card, ICICI Bank Sapphiro Credit Card, Jet Airways ICICI Bank Coral Credit Card, among others.
Axis Bank Credit Card
Axis Bank also holds prominence in the credit card industry by offering a host of attractive features for shoppers to enjoy. Privileges such as cash back options, discounts on shopping, dining, e-commerce transactions, along with complimentary lounge access at airports and others have made the shoppers run all the way to the bank to apply for a credit card. You can also enjoy such privileges by choosing from a host of cards including Signature Credit Card, Miles & More Credit Card, My Choice Credit Card, My Business Credit Card, My Wings Credit Card, and much more.
Citibank Credit Card
One of the premier credit card issuers in India, Citibank thrives on enabling shoppers to enjoy enhanced convenience on their purchase, dining, travelling and other needs. The cards issued by the bank come under lifestyle, travel, cash back, shopping and fuel categories. Citi PremierMiles Card, Indian Oil Platinum Card, Citibank Rewards Card, Citi Prestige Credit Card are some of the cards which you would like to apply for.
American Express Credit Card
Craving for more reward points? Apply for American Express Credit Cards which enable subscribers to earn Membership Reward Points every time they spend, through a powerful rewards program. In addition, the dining, travel and shopping privileges are all set to take you to the new world of convenience. Want to choose one or more from a wide range of American Express Cards? Then, do it from The American Express Membership Rewards Credit Card, The American Express Platinum Reserve Credit Card, The Jet Airways American Express Platinum Credit Card, The American Express PAYBACK Credit Card, and much more.
All these cards, as shown above, would be under the impact of GST for defaulters. You can take a cue from the table which was shown earlier to calculate the tax liability on your card.
