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Will you Pay Double GST Payment on Online Credit Card Bills?

The Goods and Services Tax (GST) came into existence in India from the midnight of July 1st, 2017 and is being pegged as the largest tax reforms post-independence. It subsumed numerous central and state level taxes and imposed a single tax regime.

However, soon after the roll-out of the GST, some message on the social media started doing the rounds that online credit card users will pay double GST on transactions!

Soon, the myth was busted as statements from Central Bank cleared that there will be no double tax charging on online credit card post-GST.

Let’s provide you some insights on how GST will impact even the best credit cards users in India and more to provide you with a clear picture.

How Does GST Impact Credit Card Users?

Under the new rule of the GST, financial services have been put under 18% bracket which is 15% to earlier times. There will be no service tax will be charged on utility bills’ payments via online credit cards. This was before GST era as well and remains unchanged! Utility service providers pay some money to card providers for offering services for bill payment which is called a Merchant Discount Rate (MDR).

This attracts some service tax but is payable by utility service provider and not the online credit card holders. Thus, like a credit card owner, you can relax and continue reaping the rewards of paying utility bills through your credit card.

Has GST Enhanced the Credit Card Bills?

Are you thinking how GST will affect the life of an average online credit card owners if not one way then by another? Be informed to know that GST won’t affect your credit card bills. The only thing that you need to care for is paying the credit card bills on time, as service charge is not levied on timely payments.

Nonetheless, when do not make timely payments, your bank or service provider will surely charge a late fee or a penalty for not paying the outstanding by a fixed time frame.

Also, the fee for late repayment will also draw a service tax of 18%. Overall, your credit card bill will surely be inflated if you have a habit of paying the dues late.

Here’s How you Can Use Credit Cards Judiciously to a Good CIBIL Score

More than worrying about the consequences of the GST on your credit card bills, the thing that you should be concerned on is having a proper usage of your online credit card bills. Smart and sensible usage of the credit cards involve the following steps such as:

  • Make it a point always to pave the way for the repayment of all your credit card’s outstanding within the billing cycle and by the due date
  • Never buy anything even on your best credit card if you are unsure of handling its repayment within the billing cycle
  • Make it a habit of utilizing the credit limit of your card up to 30-40% only.  The prudent use of the credit utilization (total credit amount you use as against total money available to you)
  • Never max out your credit card limit

The Bottom Line

Now that you are aware of the impact of the Goods and Services Tax (GST) on your online credit cards, it will be advisable to use it smartly and pay the bills on time. Once you take care of the discussed pointers, there will be no issues in handling the best credit cards ever! Happy online credit card management!

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Written by Aman Khanna

Aman  is working in the domain of Investment management in one of the top universities. He has published research papers and case studies in Investment and Fixed Deposit marketplace. He is an avid blogger in the domain of Investment management. you can also find him on social networking platforms.

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