We all love using a credit card for making payments, so why not pay our recurring and repeating taxes with them? For every purchase or bill settled with a credit card, we are rewarded with tons of rewards. But can you make income tax payments with a credit card, and should you? Many questions arise about making income tax payments with a credit card, and therefore, we are here to assist you and enlighten you with information related to making tax returns via credit card.
In this article, we are going to talk about the process of making Income Tax payments using a credit card and whether or not you should use your credit card for the same. To learn more about the usage of credit cards for income tax payments, keep reading.
Income Tax Payments via Credit Cards
Earlier, Taxpayers were able to make Income Tax payments only through the net banking of some of the famous commercial banks. However, with recent advancements, taxpayers now have multiple payment options like NEFT/RTGS, UPI, and credit cards. Making payments with a credit card carries a charge on the payment amount.
Before we discuss that, let’s first understand the process of tax payments via credit cards.
How to Pay Income Tax in India Via Credit Card?
The following are the steps that would assist you in making an Income Tax payment via a Credit card:
- Visit the official portal of Income Tax India. On the Homepage, you will find the Quick Links tab on the left side of your screen. Under the list, click on E-pay.
- In the next step, you will be required to enter your PAN Card Number along with your contact details. After that, you will be asked to enter the OTP received on your contact number.
- In this next window, select the 1st option of Advance Tax and click the proceed button.
- Now, you have to select the assessment year and the type of payment.
- In the next tab, you will be asked the amount of tax to be paid, as well as any surcharge, cess, interest, or penalty applicable to the tax amount. We have taken the tax amount of Rs. 100 as an example.
- Now, to make the payment via credit card, select the Payment Gateway option and hit continue. For making a payment via credit card, a transaction fee would be applicable to the transaction amount. The rate applicable depends on the Gateway used.
- Review the details entered and check all the amounts to see whether they are correct or not. After doing the same, click on the Pay Now button and agree to the terms and conditions.
- Next, select the payment option via credit card and then enter all the details of your credit card: Name, Card number, Expiry date, CVV, Mobile number, and Email. Once you are done, click on Pay, and you will receive an OTP on your registered number, which you have to enter to make the transaction.
- Note that credit cards issued with Visa, Mastercard, and Rupay network processors are acceptable for payments via credit cards. You won’t be able to make payments with an AmEx variant credit card.
Fees and Charges Applicable for Income Tax Payment With Credit Card
Making income tax payments with a credit card attracts a certain transaction fee or payment charge. Earlier, there was only one Payment Gateway (Federal Bank), which carried a transaction charge of 0.85% plus taxes, but now the cardholders have more options to choose from. The following are the Payment Gateways available currently:
Payment Gateway Charges – Federal Bank
| Mode of Payment | Transaction Charges (INR) |
| Credit Card (Federal Bank) | 0.85%* |
| Credit Card (Other Bank) | 0.85%* |
| Unified Payments Interface (UPI) (BHIM-UPI) | NIL |
Payment Gateway Charges – Kotak Mahindra Bank Limited
| Mode of Payment | Transaction Charges (INR) |
| Credit Cards (Master/Visa/RuPay) | 0.80%* |
| Credit Cards (International) | 2.75%* |
Payment Gateway Charges – Canara Bank
| Mode of Payment | Transaction Charges (INR) |
| Credit Card (Canara Bank) | 0.90%* |
| Credit Card (Other Bank) | 0.90%* |
| Unified Payments Interface (UPI) (BHIM-UPI) | NIL |
Payment Gateway Charges – HDFC Bank
| Mode of Payment | Transaction Charges (INR) |
| Credit Card (HDFC Bank) | 0.72%* |
| Credit Card (Other Bank) | 0.80%* |
| Unified Payments Interface (UPI) (BHIM-UPI) | NIL |
Payment Gateway Charges – SBI Bank
| Mode of Payment | Transaction Charges (INR) |
| Credit Card (SBI Bank) | Not Applicable |
| Credit Card (Other Bank) | Not Applicable |
| Unified Payments Interface (UPI) (BHIM-UPI) | NIL |
Payment Gateway Charges – Bank of Maharashtra
| Mode of Payment | Transaction Charges (INR) |
| Credit Card – Above Rs 2000 | 1.00% |
| Credit Card EMI- Master/Visa/RuPay | 1.00% |
| Unified Payments Interface (UPI) | NIL |
Payment Gateway Charges – Bandhan Bank
| Mode of Payment | Transaction Charges (INR) |
| Credit Card Other Bank | 1.00% (Convenience Charge) |
Payment Gateway Charges – ICICI Bank
| Mode of Payment | Transaction Charges (INR) |
| Retail Credit Card | 0.85% |
| Corporate Credit Card | 0.78% |
*An extra GST of 18% will be levied on all transactions.
Which Credit Card Offers the Best Rewards for Tax Payments in India?
Now that we have learned all about the various fees associated with credit card payments for income tax returns, we will look at the list of the best credit cards for income tax payments.
| Card | Fee | Reward Earning |
| HDFC BizGrow | ₹500 | 20 CashPoints/₹150, Capped at 1,500 CPs Per Statement Cycle (Bonus Points Only). Quarterly Milestone Benefit Also Offered |
| HDFC Regalia Gold | ₹2,500 | Flight and Gift Vouchers as Quarterly and Annual Milestone Benefits |
| HDFC BizPower | ₹2,500 | 20 RPs/₹150, Capped at 5,000 RPs Per Statement Cycle (Bonus Points Only). Quarterly Milestone Benefit Also Offered |
| American Express Platinum Travel | ₹5,000 | 7,500 Membership Rewards Points/₹1.9 Lakh, 10,000 Membership Rewards Points/₹4 Lakh, and 22,500 Membership Rewards Points + ₹10,000 Taj Voucher/₹7 Lakh in a Card Anniversary Year (Milestone Rewards) |
| IDFC Mayura | ₹5,999 | 3 RPs/₹150 |
| SBI Aurum | ₹9,999 | ₹1,500 Voucher on Monthly Spend of ₹1 Lakh, ₹5,000 Voucher on Spends of ₹5 Lakh (Annual) and More |
| HDFC BizBlack Metal | ₹10,000 | 25 RPs/₹150, Capped at 7,500 RPS Per Statement Cycle (Bonus Points Only). Milestone Benefits Also Offered |
| HDFC Diners Club Black Metal | ₹10,000 | 10,000 RPs on Spending ₹4 Lakh in a Calendar Quarter (Milestone Rewards) |
| HSBC Premier | ₹12,000 | 3 RPs/₹100 Spent for All Spends. Up to a Cumulative Limit of ₹1,00,000 Monthly |
| ICICI Times Black | ₹20,000 | 2 RPs/₹100, Capped at 5,000 RPs Per Statement Cycle. Milestone Benefits Also Offered |
Should you Pay Income Tax via Credit Cards?
The following points will help you decide whether or not you should make Income Tax Payments via credit cards:
- Credit Card Rewards: One should use a credit card to make an income tax payment only if they are provided with reward points on the transaction. If they do, then the effective reward rate on the card should be 2x or 2%. This is because the payment charges applicable to credit card payments for income tax payments are 1.003% (0.85 plus 18% GST). Although there are other payment gateways available that charge a lower or no fee, the cardholder should still be prepared in case any of these gateways are not in service for the time being.
- Milestone Benefits: Another reason to make the payment via credit card is that the cardholder is reaching the milestone spend and is getting the rewards associated with the credit card.
- Know the Applicable Charges: As mentioned above, the transaction processing charges applicable to credit card payments are 1.003% of the transaction amount. Therefore, taking the above example of Rs. 10,000 tax payment. The transaction charges on the same would be Rs. 100.3.
- High Interest on Unpaid Balance: Interest charges applicable on credit cards are much higher than any other payment option. If you make the income tax payment with a credit card and cannot settle the card bill on time, then you will face heavy interest charges on the due amount.
Bottom Line
Making the Income Tax Payment via credit card is a good choice as it provides you with multiple days to pay back. Also, if your card’s reward rate or milestone benefit outweighs the processing charges applicable, then it is worth going with a credit card. However, if you cannot pay back the amount, then you must not make the payment via credit card, or else you will face heavy interest rates. If you have any doubts regarding the same, let us know in the comments below.
19 comments
Nitesh
This is a really really helpful article, everything is summarised in a great way, after searching everywhere, this is where I got all the information
One question if you can answer please, in ICICI times black credit card, is it sure that GST payments are given reward points and considered for milestone benefits?
Its not clearly mentioned in their terms and conditions
Anil
Out of context question here but help would be appreciated. I complete the milestone under BizBlack & I see 2 vouchers: Smartbuy eVoucher Rs 5000 & Taj eVoucher Rs 5000
Do you know what the Smartbuy eVoucher Rs 5000 can be used for? Can it be used to buy other vouchers like Amazon vouchers?
Thanks
Daksh
Some people are getting cashback via the SBI Cashback card for tax payments. Can’t believe it.
Ajai
As per terms of reference of SBI Air India signature card, clause 11.4 c)
c. For Air India SBI Signature Card & Air India SBI Platinum Card all spending charged to the Air India SBI Signature
Card under the Program will be eligible to earn Points except the following
– balance transfers
– Financial charges (e.g., late payment fee, dishonored Cheque charges, service fee, transaction charges)
– disputed transactions
– cash advances
– Any purchase at petrol pumps/service stations identified under MCC 5172, 5541, 5983, 5542
– Flexipay
– Merchant EMI i.e. EMI’s availed at the time of purchase at Merchant establishment or websites (Reward Points reversed for Flexipay/Merchant EMI will be credited back to account only when the respective Flexipay/Merchant EMI has been successfully cancelled by the cardholder. In the event of Foreclosure of Flexipay/Merchant EMI, no Reward Points will be credited back in any scenario.)
– *E-wallet loading transactions under MCCs 6540 & 6541 w.e.f 1st July 2020 (*All identification of eligible and non-eligible transactions regarding Rewards by SBICPSL are on a best effort basis and may be subject to technical glitches)
– W.e.f. 15 Apr 2024, accrual of Reward Points on Rent Payment transactions with Air India SBI Signature credit card will be discontinued. Rent Payment transactions shall be identified under Merchant Category Code (MCC) 6513, on best effort basis.
Could not see Government spending in list of exceptions for earning reward points
Kartik Kanwar
Doesnt matter. The cards have now been discontinued. But I doubt they reward tax payments.
Rudra
The HDFC Marriott Bonvoy information is wrong.
Income tax spends do not count as “Eligible Spends” for the milestone.
“Eligible Spends” means purchases of products and services, minus returns or refunds, made
with the Credit Card by you or an authorized user of the Account. Buying products and services
with your Credit Card, in most cases, will count as a purchase; however, the following types of
transactions won’t count and won’t earn Points: EMI payments, fuel payments, wallet loading
transactions, gift card purchases, prepaid card loading, rental transactions, voucher purchases,
cash advances or withdrawals, payment of outstanding balances, payment of the Annual
Membership Fee, Government related transactions or any other non-spend charges as may be
specified.
Kartik Kanwar
True. Removed it.
Aditya
Hi,
Nice article. Does the ICICI Emirates Emeralde provide points on Tax payments ?
Kartik Kanwar
No. No points for government services.
Ishwar Chandra
Can Salaried employees pay advance tax
Kartik Kanwar
Yes.
Rishabh Shah
Hi,
Any idea if SBI Air India card gives reward points for Income Tax payment?
Kartik Kanwar
They dont
Vikram
I think most cards are not giving rewards on government spends. Any idea which cards still give rewards on such spends, maybe income tax, property tax etc?
Kartik Kanwar
List provided above.
Ankur Mittal
definitely would be under government transactions
Jitendra
Is there a way to know under which MCC category this transaction will be charged?
Vaidy
Will making this income tax payment via credit card be considered as a cash advance (or) will it be a normal online transaction?
Ankur Mittal
Normal credit card transaction, you won’t be charged interest