Payment of Tax through Credit Cards

In an attempt to curb the flow of black money and encourage non-cash transactions in the country, the Government of India has proposed that individuals who file their income tax returns using their cards shall receive some exclusive tax benefits. Overall, this medium of tax payment makes the accounting process hassle-free and simpler, thereby giving a boost to the processing speed of the transaction.

This attempt aims to assist in building a transaction history of the individual. This thereby, will help improve the credit access of the individual and eventually include the individual in the financial system of the country. Another reason why the government favours tax payment or filing returns via credit card is that non-cash transactions will discourage tax avoidance among individuals and reduce the flow of counterfeit currency.

Tax benefits on paying Income Tax via a Credit Card

There are a number of tax benefits introduced by the government so as to encourage tax paying individuals to use their credit card. Some of them are-

  • Credit card payments of income tax will allow the individual to file the challan online and will hence, provide an immediate acknowledgement of remittance.

  • A challan serves as a receipt and will be produced which includes the Corporate Identity Number (CIN) that can be downloaded and printed for reference and record purposes.

  • Individuals are allowed to remit taxes on behalf of the firm or company, and others from a desktop at any time of the day.

  • Transaction charges at gas agencies, railway tickets and petrol pumps will be removed.

  • Individuals will also be eligible to receive tax rebates if they use their credit or debit cards, or any other electronic means to pay a portion of their utility bills.

  • A Merchant Discount Rate or MDR is a type of fee charged by banks to merchants for accepting payments through credit/debit cards. The Government of India has proposed a reduction in the MDR, so as to encourage merchants to accept payment towards income tax via cards.

  • The government has also agreed to provide a tax rebate to merchants that have performed up to 50% of their transactions through cashless modes of payment.

  • A reduction of 1% to 2% in VAT will be granted to merchants on cashless transactions.

  • For better adaptability, the interchange fees charged on credit or debit card transactions will be standardised across the nation.

  • The payment gateway called PayGov India, will be the largest integrated payment gateway in India to make various payments which would also include income tax via credit cards. This system aims to simplify the complete process of income tax payments.

Payment steps

Here’s how you can pay your income tax returns by simply following these simple steps-

  • The first step is to login to the NSDL-TIN website.

  • The tax payer will have to select the challan applicable to him or her. The different types of challans include ITNS 280, ITNS 281, ITNS 282 or ITNS 283.

  • The individual then has to enter the PAN/TAN as applicable. An online verification of the PAN/TAN entered will appear on the screen.

  • Once the PAN/TAN is authenticated, the individual is allowed to fill up other challan details, like the name and address of the TAN/PAN, the bank through which the payment has been made, the accounting head under which the payment has been made and others.

  • Once the data is submitted, a confirmation screen will appear. Upon confirmation of the data entered from the tax payer, he/she will be redirected to the net-banking website of the bank.

  • Then, the taxpayer will have to login to the net-banking site with his or her user ID and password and enter the payment details for the online transaction.

  • After successful payment, a challan counterfoil shall appear on the screen that contains the CIN, the amount of the transaction and the bank through which the payment was made. The challan counterfoil will henceforth, serve as proof of payment of tax.

Steps to file GST (Goods and Service Tax)

From 1st July 2017 onwards, GST came into existence. GST or Goods and Service Tax Act is an indirect tax levied on the supply of goods and services. This law has replaced a number of laws that existed in India previously. GST has now become one indirect tax for the entire country. The components of GST include CGST, SGST and IGST. Following are the steps to pay GST online-

  • To begin with, login to the GST Portal.

  • Enter your username, password and captcha code.

  • Enter the amounts and select the method of payment i.e. e-payment, over the counter or NEFT/RTGS. Click on Generate Challan once all the details have been filled in.

  • You will find three methods of payment here:

    • Internet banking and debit/credit cards of authorized banks

    • Over the counter payment through authorized banks

    • Payment through NEFT/RTGS from any bank

  • A summary page will pop up which contains the details of the challan. Select the Mode of Payment. You can either select ‘Over the Counter’ to make payment in person by going to the bank, or choose ‘E-Payment’, ‘NEFT/ RTGS to make online GST Payment. Once decided, click on ‘Make Payment’.

  • You can make an online payment of GST through Net-Banking or take a printout of the challan and make payment in Bank.

FAQs

What is GST?

GST or Goods and Services Tax (GST) is a value-added tax, which is levied on most goods and services sold for domestic consumption. The GST is paid by consumers but is remitted to the government by the businesses selling the goods and services.

What is CIN?

CIN or Corporate Identification Number or Company CIN No. in India, is a unique identification number assigned to a company by Registrar of Companies functioning in various states under the Ministry of Corporate Affairs (MCA), Govt. of India.

Is it safe to pay my income tax via a credit card?

Yes, it is absolutely safe to pay your income tax through a credit card. The payment portal/gateway for processing the payments are properly secured and protected.

Is there eligibility criteria for payment of taxes via credit card?

No, there is no specified eligibility criteria. If you have a valid credit card, you can pay your taxes online through that medium.

Are there any recent changes in the rules for payment of taxes via credit card?

No, there are no recent changes in the rules for payment of taxes via a credit card. However, recently it has been noticed that the credit card convenience fee has been standardised in the range of 1.87% - 2% by all credit card payment processors.

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