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GST on credit card fees and charges: what is taxed

Updated 30 Oct 2026 · by SwipeWise editorial team · how we write

A card fee of ₹500 shows up as ₹590 on the statement. The extra is GST. This guide sets out what the official GST documents say about credit card charges, and shows the arithmetic using examples printed in two issuers’ MITCs.

Tax rules can be amended. Confirm the current position with the issuer’s MITC and the CBIC.

What the official documents say

  • The interest exemption carves out credit card interest. CBIC Circular 218/12/2024-GST (26 June 2024) says services of extending loans or advances where the consideration is interest or discount are exempt under sub-entry (a) of entry 27 of Notification 12/2017-Central Tax (Rate), “other than interest involved in credit card services.” So, as quoted in the circular, the exemption does not cover credit card interest. The circular does not itself state a tax rate for that interest; the issuers’ MITCs below say GST applies to it.
  • Fees other than interest are taxable. The same circular says charges of any nature on a loan, other than interest or discount, are taxable consideration for processing and administration services and are liable to GST. The circular was issued on loans between related persons and its operative clarification is about those cases. The passage on processing fees is background to it, and it is not specific to credit cards. Whether a given card fee is a “processing fee” is not decided there.
  • Rate. In the consolidated Notification 11/2017-Central Tax (Rate), serial number 15 (heading 9971, financial and related services), item (vii), “financial and related services other than” the items listed before it, carries central tax of 9%. With the equal state tax this is 18%. The notification does not mention credit card fees by name; the 18% in the examples below is what the issuers’ MITCs apply. The copy we read is the GST Council’s version amended up to 1 April 2019. We did not check later amendments.

We could not retrieve the CBIC’s banking-sector FAQ, which reportedly deals with late payment charges on card dues, so we do not rely on it. The issuer examples below show late payment charges carrying GST in practice.

How the issuers apply it

  • SBI Card’s MITC says “all taxes would be charged as applicable on all the above Fees, Interest & Charges.” For statements issued on or after 1 July 2017, cardholders whose state of residence in SBI Card’s records is Haryana pay central tax at 9% plus state tax at 9%; others pay integrated tax at 18%.
  • HDFC Bank’s MITC says GST is applicable on all fees, interest and other charges, split into CGST and SGST (or UTGST) where the place of provision and place of supply are in the same state, and IGST otherwise.
  • RBI requires that unpaid taxes and charges not be capitalised, meaning interest cannot be charged on them. Both MITCs say payments are applied to GST ahead of retail spends and cash advances.

Worked example 1: annual or joining fee

  • SBI Card lists the SimplyCLICK SBI Card annual fee as ₹499 and says its annual fees are “plus applicable taxes”. At 18%, GST = 18% x 499 = ₹89.82, so ₹588.82 is charged.
  • HDFC Bank’s PIXEL Play card fee is listed as ₹500 + GST: 18% x 500 = ₹90, so ₹590.
  • The MITC examples themselves show the same split: SBI Card’s Example 3 has an annual fee of ₹500 and taxes of ₹90 in the same month.

Worked example 2: interest and late fee

This is HDFC Bank’s own illustration for most card variants. The ₹20,000 of April purchases is billed on 18 April; the cardholder pays ₹2,000 on 12 May, buys ₹1,000 of groceries on 14 May and pays ₹15,000 on 15 May, leaving ₹4,000 of principal on the 18 May statement:

  • Interest: ₹845.75
  • Late payment charge: ₹900
  • Taxable total: 845.75 + 900 = ₹1,745.75
  • GST at 18%: 18% x 1,745.75 = ₹314.235, which HDFC prints as ₹314.23
  • Adding ₹4,000 of principal outstanding: 1,745.75 + 314.23 + 4,000 = ₹6,059.98 by our sum; HDFC prints ₹6,059.99, a one-paisa rounding difference (the unrounded GST gives 6,059.985)

GST is therefore charged on the interest as well as on the late fee, as HDFC’s MITC states.

What is not taxed this way

The price of goods you buy is taxed, if at all, in the merchant’s invoice. The card issuer’s GST is on the issuer’s own fees, interest and charges. Repayment of principal is not a fee.

For how forex markup and fuel surcharge lines are charged, see our forex markup guide and fuel surcharge guide. We have not verified how GST is applied to those lines at each issuer.

Reading it on your statement

Fee, interest and GST appear as separate lines. HDFC Bank’s MITC says GST on fees and interest billed on the statement date appears in the next month’s statement, and that GST levied is not reversed on a dispute about a fee, charge or interest. Whether a waived fee also has its GST reversed is not addressed in the passages we read, so check the statement after a waiver. Our annual fee waiver guide covers how targets are counted.

Input tax credit

SBI Card’s MITC puts the responsibility on the cardholder to give correct and timely information so the issuer can file GST compliance, which enables the cardholder to take input tax credit; it disclaims loss of credit from incorrect information. Whether any business can claim credit depends on its own registration and the nature of the expense, so ask a qualified tax professional. We do not give tax advice.

What to check before you apply

  • The fee in the MITC, and whether it is shown before or after GST.
  • The interest rate and how GST is added on top.
  • Late fee and cash advance fee slabs.
  • The cost of holding the card if you never reach the waiver target; our lifetime-free page lists alternatives.

This guide describes the documents we read, not a ruling on any one card. See our calculator, which estimates rewards and should be read next to the GST-inclusive fee, and our methodology. Nothing here is tax or financial advice.

Sources

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