GST Impact on Credit Cards – Know New Tax Payable
Since the implication of the GST Bill, much has changed in the tax rules existing previously. The new tax norms are applicable on the credit card transaction as well. The GST impact on credit cards are that the customer has to pay the convenience fee of 18% instead of 15% that was applicable earlier.
Although when the GST Bill was proposed, there were certain misconceptions that sustained because of the false messages circulating on the messaging app. One of the misconception ruling the mind of the credit card holders is post GST the card payments will attract double taxation and they have to pay GST charges twice for making payments via credit card. But this is not the reality as no additional GST is applicable on credit card payments.
However, the reality is that there is a hike of 3% in the convenience charge. Also, this rate of 18% will be applicable on the revolving credit. That is, the customer not paying the bill have to pay the GST along with the principal outstanding and interest charged on the outstanding amount.
The GST impact on credit card amount will be calculated on the total interest accrued. Previously, the service tax of 15% was levied on the outstanding bills along with the interest.
For those who were planning to apply for credit card but are now aversing from taking due to the increased taxation, it won’t be a good idea. As there are several benefits that you get on usage of CC. The benefits are as follows:
Instant Gratification – It is wonderful to get the things as when required rather than waiting for it. In case of unavailability of funds one feels bounded and gets disappointed on unfulfillment of wishes. CC provides the liberty to get the things first and pay for it later. It helps in instant gratification of desires.
0% Charge – If used sensibly than without paying any extra charge you can get what you want. For this, you need to pay back the amount availed within the credit free time limit.
Protection – It is a secured mode of payment. The customer can always claim the mone back in case of any faulty purchase. The payment is password protected so that no one can inflate the bill on your behalf
Cashback Offers – While you are paying for the products you earn the cash back on every spent.
Exciting Offers – The issuing company provides various offers such as discount on dining bills and branded outlets, free access to lounges, air miles, discount on hotels and membership to golf courses.
Switch your Balance – If there is outstanding balance on your card, you always have the option to take other card and settle the bill of previous card.
Convenience of booking flight tickets, hotel and movie tickets It is not necessary to have a CC but if you need it and are not applying for it worrying about the increased rates it won’t be a wise thing to do.
GST Impact on Credit Cards
Know how the implementation of GST will affect the charges to paid by the credit card holder. The changes brought in the tax regime will have the following benefits:
- On the payments of utility bills via credit card the customer has to pay GST twice is a false notion being spread on social networking sites.
- The service tax of 15% has been replaced with 18% GST slab.
- The convenience fee will be charged at the rate of 18% on payments made via credit cards
- The defaulters have to pay the GST with the interest charged on the outstanding credit amount.