Paying taxes is inevitable, but did you know you can make this expense more rewarding? By paying your taxes using a credit card, you can earn cashback, rewards, or other perks. However, not all cards offer benefits for government transactions, and some even exclude such payments from their reward programs.
This blog explores:
- Can you pay taxes using a credit card?
- What are the implications of using a credit card for taxes?
- The best credit cards for tax payments.
- A step-by-step guide to paying taxes via credit card.
Can You Pay Taxes Using a Credit Card?
Yes, taxes—including Income Tax, GST, TDS, and TCS—can be paid through credit cards on authorized platforms like TIN NSDL and the Income Tax e-Filing portal. However, convenience fees (typically 0.85%–2%) apply, so it’s crucial to weigh the rewards earned against these fees.
Implications of Using a Credit Card for Tax Payments
Advantages
Rewards or Cashbacks
Certain credit cards allow you to earn rewards or cashback on tax payments.
Liquidity mgmt & credit building
Defer immediate payments and manage cash flow and also Boost your credit score by making regular, on-time payments
Meeting spends milestones
Achieve spending thresholds for bonus rewards or fee waivers
DISADVANTAGES
- Convenience Fees: These can reduce or negate the value of rewards
- Exclusions: Some cards exclude government spends from earning rewards
- Interest Charges: Carrying a balance can lead to high interest costs
CREDIT CARDS FOR TAX PAYMENTS: CREST TOP PICKS
01
SBI Cashback Credit Card
Reward Rate: 5% cashback on online spends.Key Details:
- Being a RuPay card, you have the option to pay tax using UPI on the credit card
- Maximum cashback: ₹5,000 per month
- Taxes are not explicitly excluded from the list as per eligibility for cashback
Fees: ₹999 annual fee (waived on annual spends of ₹2 lakh)
Verdict: Great for maximizing online spending rewards
02
Standard Chartered Ultimate Credit Card
Reward Rate: 2% (5 points per ₹150 spent).Key Details:
- Rewards on government transactions are included.
- Points redeemable only via Standard Chartered’s catalog (hotel vouchers being a standout option).
Fees: ₹5,000 annual fee.
Verdict: Offers reliable rewards for tax payments but limited flexibility in rewards redemption.
03
HDFC Business Black Credit Card (BizBlack)
Reward Rate: 5x points, equivalent to 16.5% return on tax and GST payments.
Key Details:
Points never expire.
Best for business owners making high-value transactions.
Fees: ₹10,000 annual fee.
Verdict: The highest reward rate for tax payments, ideal for businesses or individuals with significant tax liabilities.
04
IDFC FIRST Wealth Credit Card
Reward Rate:
1 point per ₹150 (₹0.25 per point).
3x points on spends up to ₹20,000 per cycle.
10x points after crossing ₹20,000, except for government spends.
Key Details:
Exclusions: Government services, utilities, education, insurance, wallet loads, and rental payments don’t qualify for 10x rewards.
Lifetime free card.
Redemption fee: ₹99 + taxes.
Verdict: Modest rewards for tax payments but attractive for general spends.
05
Kotak White Credit Card
Reward Rate: Earn White Pass value, which can be used for lifestyle rewards.Key Details:
- White Pass value is unlocked upon reaching spend milestones.
- Tax payments can count towards achieving these milestones.
Fees: ₹3,000 annual fee.
Verdict: A unique program that leverages tax payments to unlock lifestyle benefits. Great for frequent spenders.
Step-by-Step Guide: How to Pay Taxes Using a Credit Card
- Visit the Tax Portal
- Log in to the e-Filing portal or TIN NSDL.
- Select Payment Option
- Choose the tax type: Income Tax, GST, TDS, etc.
- Choose Credit Card as the Payment Method
- Pick your card issuer from the list of supported banks.
- Complete the Transaction
- Enter your credit card details, review the convenience fee, and confirm the payment.
- Save the Receipt
- Keep the acknowledgment for future reference.
Conclusion
Paying taxes with a credit card can be a smart financial strategy, especially if you select a card that offers meaningful rewards. High-reward options like the HDFC Business Black Card or versatile cards like the Kotak White Credit Card can make your tax payments more rewarding. However, always factor in convenience fees to ensure the rewards justify the costs.
Ready to make your taxes work for you? Choose the right credit card and maximize your benefits today!
Leave a Reply