What are IGST charges (VPS-RATE, DB, CI @18) on Credit card bill

Credit card bills nowadays reference IGST charges if you closely check the transactions. Whether it is a credit card from ICICI, SBI or HDFC, or any bank, it is mandatory to include GST on specific transactions; that is why you see charges labelled like IGST-VPS RATE-18.0, IGST DB, IGST CI, all taxed at 18 percent as of 2023. Here, we mainly talk about IGST debits in HDFC credit card statements, but anyone going through their credit card bill for the first time or after a card renewal, taking an EMI plan, etc., would see it and wonder what this charge IGST is about. If you are a credit card user, read more about IGST charges on credit cards, how banks calculate this amount, and for what all transactions it is applicable.

Why there is IGST charge in credit card EMI/ service charge fees?

GST is applicable to financial services, and the tax rate was increased to 18 percentage a few years ago. Regarding banking services, especially credit cards, the interest part of EMIs and the fee amount charged for most services come under IGST. Even for the instalments of No Cost EMI’s, the monthly Interest part is taxed at 18% and will reflect on your credit card bill as IGST VPS, IGST DB, IGST CI, and GST charges.

IGST collected by banks is submitted to the GST department, which divides it between the central and state governments at 9% each. Let’s look at all transactions IGST is charged at 18% in the credit card sector.

• Interest component of all EMI instalments, including no cost EMIs and cash loans above or within credit limit, unless otherwise specified.
• Credit Card renewal and joining fees.
• 18% of services fees like FCY Mark-up, finance charges, late fees, EMI processing fee, etc.

Calculating the impact of IGST on your credit card EMI or a related fee is simple – just take the interest component of your monthly instalment using a tool like the Federal Bank EMI calculator.

For that, put your credit card EMI details, calculate and then take the amortization schedule as shown in the screenshot. Here, take 18% of the interest amount of 1750 as highlighted, which is 315 and will come in your first month’s bill as IGST charges.

IGST-VPS RATE 18.0 on HDFC Bank Credit card statement

I came across the IGST VPS Rate-18.0 entries when I was checking my billing history on HDFC netbanking site. To my surprise, it even appeared in the unbilled section even though I didn’t use the credit card on that month. I did a background check on this, and finally, I found the reason for having IGST VPS charges on HDFC credit cards.

• The IGST-VPS at rate 18.0 percentage is a service charge as per the new integrated goods and services tax system in India.
• IGST-VPS charges are only applicable to the Interest part your HDFC credit card EMIs.
• Hence, a rate of 18% applies to interest component of your Insta Loan, Insta Jumbo Loan*, Smart EMI and other loan products under the credit card.
• Sometimes you may also get IGST-VPS debits for late payments and processing fees related to credit card loans.
• HDFC and other banks do not charge IGST on other regular transactions you make through the card.

I found the details of IGST rates on HDFC credit card from the official site. From July 2017, HDFC charges GST at 18.0 percent on specific transactions. Again, it is clear from the screenshot that the IGST rates, if applicable, reflect on the statement, only in the next billing cycle.

Finding the source of IGST-VPS on HDFC Bank credit card bill

The main reason for having IGST-VPS in your HDFC credit card bill is the presence loans and their EMI’s mapped to your account. For this reason, we have to check our existing credit card loans to locate the source of IGST-VPS charges.

Login to HDFC credit card section on Netbanking site. Now, open “Loan Details” under “Enquire” section in the sidebar. As shown in the video, select your card number and proceed. The site will list all your existing EMIs. Click on one and see the schedule of the payment for the current month. Note-down the interest part of the EMI. Now come back to check the unbilled section for credit card. There you can see the 18% of the interest added as IGST VPS charges, as shown in the screenshot. This charge will appear your next’s month’s HDFC credit card statement.

Apart from the EMI interest, HDFC Bank charges GST on various services related to Credit Card. If you apply for Insta Loan or Dial a Smart EMI, they charge GST on the processing fee amount. IGST charge is also applicable on FCY markup fee on international transactions.

IGST charges on other bank credit cards (ICICI, SBI, AXIS, and others)

Not only HDFC but all banks collect IGST charges on their credit card bills, and you can’t do anything about it. Expect it if you have EMIs running on the card or if you did a service fee-incurring transaction in the previous statement period. However, they may use different labels to mention the same in the statement. For instance, ICICI Bank uses igst-ci@18, SBI terms it as igst db @ 18.00, and for Axis Bank, it’s just GST charges. So don’t take much stress- you don’t need to call your bank if you see an IGST amount on your bill- it’s pretty standard these days.

What are IGST charges (VPS-RATE, DB, CI @18) on Credit card bill