Should You Pay Tax with Credit Card? Understanding the Process, Pros, and Cons

Sometimes having a large income tax liability can be difficult because of cash flow or liquidity issues. A credit card can be useful in situations where it allows taxpayers to pay their taxes in instalments, something known as an EMI capability. Through the e-filing portal, taxpayers can pay their income taxes thanks to a new e-tax provision provided by the Indian government. These days, you can pay your taxes via debit and credit cards, internet banking (RTGS/NEFT), pay-at-bank counters, and UPI. In actuality, credit card users are eligible for extra tax breaks on their payments. In this article, we will explain the process of paying tax with a credit card, and also highlight the pros and cons it entails.

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Table of Contents

• Payment of Tax with Credit Card

• Steps to Pay Income Tax with Credit Card

• Steps to Pay GST with Credit Card

• Benefits of Paying Tax with Credit Card

• Cons of Paying Tax with Credit Card

• Conclusion

• Frequently Asked Questions

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Payment of Tax with Credit Card

To reduce the amount of unaccounted currency used nationwide, the Indian government implemented cashless transactions. It has suggested tax advantages for people who use their credit cards to complete income tax returns in an effort to further promote non-cash transactions. Fast and easy transactions are now available to cardholders. At the same time, the government can curb the supply of counterfeit money and lessen tax evasion by those who have trouble paying taxes. Although using your credit card to pay taxes can result in rewards, it's equally crucial to understand what you can claim. 

Steps to Pay Income Tax with Credit Card

Here is a step-by-step instruction to help you pay your taxes with a credit card if you're unsure how to do so on the income tax portal:

Step 1: Go to and log in to the income tax official website.

Step 2: You must go to the income tax portal and select the "e-Pay Tax" button in order to pay your taxes online. After entering your mobile number and PAN, click "Continue." An OTP will be sent to your mobile device, which you must enter in the appropriate field. Following validation, a success message will show up.

Step 3: You will see four options on the following page. Use a credit card to pay income tax by choosing the "Income Tax" option and clicking "Proceed."

Step 4: You must choose the assessment year and the payment method on the following page. Click "Continue" to continue after selecting the relevant choices.

Step 5: Enter the breakdown of your payment, including tax, surcharge, cess, and interest, on the next page. In this case, you can use a credit card and write Re 1 in the "tax" section. breakdown of your payment

Step 6: Choose your preferred payment gateway by selecting the "Payment Gateway including UPI and Credit Card" option on the following screen. You can compare the fees for each gateway before moving on because they might vary. On the page that appears after selecting "Continue," you will see a summary of all of your tax payments.

Step 7. To complete the payment, enter your credit card number, CVV, and expiration date on the payment gateway page. You will receive a confirmation as soon as the transaction is successful.

Steps to Pay GST with Credit Card

The following steps are to be implemented to pay the Goods and Services Tax with a credit card:

Step 1: Go to and log in to the TIN-NSDL website.

Step 2: As instructed, choose the Challan Application Number. A variety of challan varieties are available to you, such as ITNS 280, ITNS 281, ITNS 282, or ITNS 283.

Step 3: As requested, supply your TAN information and PAN card. Online verification will be done for these.

Step 4: After authentication, you can enter the challan information, including the partner bank information, the transaction's accounting head, the name and address associated with the PAN/TAN, etc.

Step 5: You will be asked to verify the information you supplied after it has been submitted. You will then be taken to the Internet Banking platform of your partner bank.

Step 6: You can now use your credit card to pay your taxes by logging into your bank's platform.

Step 7: After the transaction is finished, a counterfoil with the transaction amount, banking information, and CIN will be sent to you.

Benefits of Paying Tax with Credit Card

Using a credit card to pay your taxes can be a wise choice for a number of reasons, including generating reward points and streamlining the tax payment process. The following are the pros of utilising a credit card to pay taxes:

• Credit card payments are something that everyone is fairly acquainted with these days. The simplicity of the payment process and familiarity with the payment system are two of the biggest advantages of paying income taxes with a credit card.

  
  

• When you use a credit card to make a purchase, a clear digital record of the transaction is left behind. In an emergency, it might also serve as proof of payment. Additionally, it might be useful in financial evaluations and audits.

  
  

• For new purchases, the majority of credit cards provide an interest-free grace period. Taxpayers can better manage their cash flow during this time by carefully planning when to make their tax payments.

  
  

• Many credit cards give you reward points for everything you do, including paying taxes. Later on, these reward points can be exchanged for a variety of advantages, including money, flying miles, and shopping coupons. Additionally, several credit cards have features designed especially for paying taxes. Prior to utilizing your credit card to pay taxes, always review the benefits and incentives it gives.

  
  

• Large transactions can be converted into Equated Monthly Instalments, or EMIs, using certain credit cards. For people with large tax obligations, this can be a very useful feature. To put it another way, taxpayers can use a credit card to pay their taxes and then pay back the remaining balance in monthly payments.

Cons of Paying Tax with Credit Card

While there are many advantages to paying taxes with a credit card, there are also some disadvantages. After talking about the benefits of paying taxes with credit cards, here are the potential cons of doing so:

• When paying taxes with a credit card, the government levies a small convenience fee. If the tax burden is high, this fee might be significant even though it represents a very small portion of the transaction price.

  
  

• Although using a credit card to make payments is a great idea, you may have to pay hefty interest if you are unable to pay off your credit card bill in full. As a result, paying off your credit card bills on due dates down the road is crucial.

  
  

• It may occasionally be the case that certain tax payments are not eligible for credit card payments. You may need to use conventional payment methods to make these tax payments. Because of this, it's crucial to confirm whether you may pay with a credit card for the particular tax payment you want to make.

  
  

• Your credit utilization ratio can rise sharply when you use your credit card to make a sizable tax payment. Additionally, it may have an impact on your credit score, which is determined by contrasting your credit limit and credit card debt.

  
  

• Because using a credit card to pay taxes is so simple, some taxpayers may become overly carefree and neglect to plan and budget for taxes, which could put a burden on their finances when the credit card bill is due.

Conclusion

An easy and convenient approach to fulfil your tax obligations is to pay your income taxes online using a credit card. However, be sure to ask your bank if they accept online tax payments before choosing this option. To prevent mistakes, double-check all the information before finalizing the payment. Paying your income tax online with a credit card is simple if you follow the instructions in this article. You can also take use of its advantages.

Frequently Asked Questions

Can ITR be paid through a credit card?

Yes, you can use a credit card to pay the amount of your unpaid taxes. Go to the tax payment section and choose the "Pay Tax" option to pay your taxes using a credit card.

Can I save tax using my credit card to pay income tax?

Although using a credit card to pay your income taxes won't save you money, you can accrue reward points for the transaction. These reward points can subsequently be exchanged for cashback, retail vouchers, travel purchase discounts, and other benefits.

Does paying your taxes with a credit card influence your credit score?

Using a credit card to pay taxes won't have an immediate effect on your credit score. Your credit usage ratio and overall debt do, nevertheless, have an impact. Your credit score may suffer if you use a credit card to pay taxes but don't settle the debt.

Is using a credit card to pay income tax safe?

It is very safe to use a credit card to pay your income taxes. The processing gateway or payment portal is adequately safeguarded and secured.

What are the eligibility criteria to pay taxes with a credit card?

There are no particular requirements to be eligible to use a credit card to pay taxes. To make your payment, all you need is a working credit card.

Can a later date be scheduled for tax payment?

Yes, you can plan to pay your taxes at a later time using the net banking option. However, this facility does not accept payments with credit or debit cards.

Have the rules for credit card tax payments changed?

The rules pertaining to credit card tax payments have not changed recently, sorry. However, it was recently discovered that the convenience fee for credit cards has been standardized by all credit card payment processors to be between 1.87% and 2%.

What should I do if my income tax payment fails?

Usually, the money will be returned within three to four business days. If not, call the income tax department's helpline. The crew will help you locate a solution if you specify your CRN and PAN.

What are the main financial advantages of paying tax with a credit card?

Paying tax with a credit card can help you manage cash flow by leveraging the interest-free period, and you may earn reward points or cashback, especially with select cards that offer benefits on government payments.

How does the convenience fee impact the total cost of paying tax by credit card?

A convenience fee, typically around 1–2% of the tax amount, is added to your payment. For large tax dues, this fee can be significant and may outweigh any rewards or cashback you earn.

Are there any risks to my credit score if I pay a large tax bill with a credit card?

Yes, a large tax payment can increase your credit utilization ratio, which may temporarily lower your credit score if you don’t pay off the balance quickly.

Is it possible to pay income tax in EMIs using a credit card?

Many credit cards allow you to convert large payments into EMIs, spreading your tax payment over several months. However, EMI conversions may come with interest charges and processing fees.

Do all credit cards in India offer rewards on tax payments?

No, only select cards—often premium or business cards—offer rewards or cashback on tax payments. Always check your card’s terms, as many exclude government transactions from rewards.

What happens if I miss the payment of my credit card bill after paying tax?

Missing your credit card payment will result in high interest charges, usually upwards of 3% per month, quickly erasing any benefit from rewards or convenience.

Can I pay advance tax or self-assessment tax using a credit card?

Yes, you can use a credit card to pay advance tax, self-assessment tax, or demand tax through the e-filing portal’s payment gateway, subject to the availability of this option for your tax type.

Are there any restrictions on the type of taxes that can be paid via credit card?

While most direct taxes can be paid, some government portals or banks may restrict credit card payments for certain tax types, so always verify before initiating the transaction.

How soon is my tax payment reflected if I use a credit card?

Generally, the payment is processed instantly or within a few hours, and you’ll receive a challan as proof. Always save this for your records and future reference.

Is there any way to reduce the cost of paying tax with a credit card?

You can minimize costs by using cards with lower convenience fees, maximizing the interest-free period, and paying your bill in full before the due date to avoid interest charges.