Question 1

Do banks charge GST on Credit Card EMI?

Accepted Answer

Yes. While banks heavily advertise the base EMI, they are legally required to charge 18% GST on the interest component of your EMI. Because the interest component is highest in the first few months, your actual billed amount will be much higher than the advertised EMI initially.

Question 2

Is 'No Cost EMI' actually free?

Accepted Answer

No. In a 'No Cost EMI', the merchant gives you an upfront discount equal to the interest amount. However, the bank still charges you interest, and crucially, they still charge you 18% GST on that interest. You will always pay more than the product's cash price.

Question 3

What is a processing fee?

Accepted Answer

Most banks charge a one-time processing fee (usually 1% to 2% of the transaction amount) to convert a purchase into an EMI. This fee also attracts an 18% GST.

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