GST used to be 18% on the credit card charges including annual fee as well as interest. I was wondering whether that has been changed or revised after the new GST guidelines issued by the GST council in september 2025? If yes, what would be the new charges?
No, the GST rate on credit card charges has not been revised under the September 2025 GST reforms. The council focused on simplifying tax slabs for goods and exempting life and health insurance premiums from GST, but financial services such as credit cards were not included in these changes.
Credit card users therefore continue to pay GST at 18 percent on a range of charges.
These include annual or membership fees, interest on outstanding EMIs, late payment charges, processing fees, and over-limit penalties. The rate that applied before the reforms remains exactly the same now.
In practical terms, whenever a bank levies any of these charges, GST at 18 percent is added to the base amount. This keeps the overall cost of using credit cards unchanged, even though other sectors have seen relief under the revised GST structure.
Since GST on credit card charges is still 18% even after GST 2.0, is there any way cardholders can reduce or avoid paying these extra costs—for example, by choosing certain types of cards or payment methods?
Thank you for such an insightful answer.