Can income tax be paid through credit card also? Know what is the complete process?

Income Tax Bill: As the date for filing income tax returns approaches, taxpayers become nervous. If the deadline for filing tax is near and you do not have money, then you can also use credit card. Very few people know that income tax can also be paid through options like net banking, UPI or debit card.

Speaking to The Economic Times, Adhil Shetty, CEO, BankBazaar.com, said, “The Income Tax Department has no problem with using credit cards to pay your taxes. The payment gateway gives you all digital payment options, including UPI, net banking, and debit and credit cards.”

What are its benefits?

• If the deadline for filing taxes is near and you do not have money, then this can prove to be useful for you.
• The credit card offers you an interest-free period of 30-45 days, allowing you to complete the payment till the next billing cycle. However, the benefit of the interest-free period is available only if you pay the bill in full on the due date.
• Some premium or business cards like HDFC BizBlack offer reward points or cash on payment of taxes.
• Paying a larger tax amount helps you meet the Milestone Spend of the card’s annual expenditure, due to which the annual fee can be waived off.

Know its disadvantages

• There is usually a processing charge of 0.72-1.25 percent on payment of income tax through credit card, on which 18 percent GST is also applicable.
• If you do not pay your credit card bill on time, you may have to pay a heavy interest of 36-42 percent annually.
• Heavy tax payments can increase your credit utilization, which can lead to a decline in credit score. Suppose your credit card limit is Rs 200000 and you pay income tax of Rs 150000, then your CUR becomes 75 percent. If CUR goes above 30 percent, the credit bureau considers it as a risk. They think that you are too dependent on credit cards for your financial needs.
• Under the new rule proposed from April 1, 2026, if your annual credit card bill is more than Rs 10 lakh, then the Income Tax Department can investigate it.

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