Credit card transactions will undoubtedly be covered under GST and it would be applicable on late credit card payments, interest rate and processing fee.
There were rumours doing round that GST will be levied doubly on credit card transactions/payments, once on the Utility Bill and again on the Credit Card Bill. However, the truth is that there would be 18% GST applicable on Late Credit Card Payments but nothing would be charged doubly. Revenue Secretary – Dr. Hansmukh Adhia had also clarified this in one of his tweets earlier this month. Credit card transactions will undoubtedly be covered under GST and it would be applicable on late credit card payments, interest rate and processing fee. GST will not be applicable on foreign credit cards.
A set off facility is also available to the banks whereby the end customers will be the recipient of any savings that result from the bank setting off their liabilities pertaining to GST against credit received by them on purchase of goods.
The concept of Input Service Distribution i.e. ISD uses the accumulated input credit in those cases where areas releasing liabilities of GST are not quite the same as area where inputs are gotten.
With 18% GST, an increment is expected in the cost of financial transactions like loan processing fees, debit/credit card charges, insurance premiums and so on, however this increase in the charges is moderate as this 18% GST replaces the previous 15% Service Tax.