Double GST on credit card payments?

The GST rollout from the midnight of Friday and Saturday, other than unleashing a bit of confusion among both consumers and traders, has also led to certain rumours doing the rounds on social media.

One such rumour circulating on messaging app WhatsApp is that GST will be levied twice, if utility bills for services such as telephone, mobile, gas, electricity are paid through credit cards.

The message tells consumers that GST will be levied once on the utility bill for the service, and once again on the amount billed on the credit card, urging people to either pay these bills in cash or via internet banking.

Revenue Secretary Hasmukh Adhia on Sunday took to micro-blogging Twitter to reveal the truth.

It would be important to note here that even in the pre-GST era service tax was levied by banks only on interest payments, annual charges and processing fees on EMIs (equated monthly installments), and not on credit card payments made on time. The service tax was earlier 15% which has now been replaced by an 18% GST on financial services. So, yes, if you pay your credit bills late, then you would be paying more because the interest or late payment charges would be taxed at a higher rate, otherwise no.

Some utility bills will be more expensive in the GST regime as broadband, mobile, piped gas, LPG cylinders etc. attract more tax under the new structure. LPG for example, has been put in the 5% GST slab. Earlier, most states such as Delhi did not tax the green fuel, while some levied VAT (value added tax) ranging between 2 and 4%.

So, while some bills go up and late credit card payments get taxed around 3% more than before, there is definitely no paying GST twice.

GST is India's most ambitious tax reform since its independence in 1947 and subsumes over a dozen central and state taxes that were levied on goods and services bringing India under a uniform tax regime. The new tax regime implemented by the Narendra Modi government which has been in the works for over 15 years is expected to add 2% to the country's GDP (gross domestic product).