If I use my credit card to pay utility bills, will I end up paying GST twice—once for the service and a second time for the credit card bill?
No, using your credit card to pay utility bills does not typically result in double taxation with respect to Goods and Services Tax (GST) or similar consumption taxes. Let’s break down the process:
- Payment of utility bill:
- When you pay your utility bill using your credit card, you are essentially settling the amount you owe to the utility service provider.
- The GST on the utility service is typically included in the total bill amount you pay to the service provider.
- Credit card payment:
- When you pay your credit card bill, you are paying back the money you borrowed from the credit card issuer to make various purchases, including the utility bill payment.
- There is no additional GST on your credit card bill payment itself. You are reimbursing the credit card company for the funds they advanced you.
In summary, you are not paying GST twice on the same transaction. The GST associated with the utility service is included in the utility bill, and when you pay your credit card bill, you are settling the overall amount owed, which includes the utility bill and any other purchases made using the credit card.
In India on Credit Card services there is 18% GST, the 18% GST on credit card EMI payments applies to both the EMI interest component and the processing fee. And if you miss your EMI payments, the same amount of GST will be added to your credit card interest rate.