What Is Igst Charges in Credit Card Calculator
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Reviewed by Calculator Editorial Team
Integrated Goods and Services Tax (IGST) is a comprehensive tax levied on inter-state transactions in India. When you use a credit card for purchases, IGST may be applied to the transaction amount. This calculator helps you understand and calculate IGST charges on credit card transactions.
What is IGST?
IGST stands for Integrated Goods and Services Tax. It is a single indirect tax on the supply of goods and services across state borders in India. IGST is levied on inter-state transactions and is collected by the central government.
The introduction of IGST was part of the Goods and Services Tax (GST) reform, which replaced multiple indirect taxes with a unified tax system. IGST is calculated as a percentage of the transaction value and is added to the bill amount.
How is IGST Applied to Credit Card Transactions?
When you make a purchase using a credit card, the merchant may charge IGST if the transaction involves goods or services that are subject to GST. Here's how IGST is typically applied:
- The merchant calculates the GST (which includes IGST for inter-state transactions) on the bill amount.
- The total amount including IGST is then charged to your credit card.
- Your credit card issuer may add their own service fees and foreign transaction fees if applicable.
It's important to note that not all transactions will have IGST applied. Only transactions involving inter-state supplies of goods and services are subject to IGST.
IGST Calculation Formula
The IGST amount is calculated as a percentage of the transaction value. The formula is:
Where:
- Transaction Value is the amount of the purchase before tax.
- IGST Rate is the applicable tax rate (e.g., 5%, 12%, 18%, or 28%).
The total amount to be paid will be the sum of the transaction value and the IGST amount.
IGST vs Other Taxes
IGST is different from other taxes like CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax). Here's a comparison:
| Tax Type | Applicable Transactions | Collected By |
|---|---|---|
| IGST | Inter-state transactions | Central Government |
| CGST | Intra-state transactions | Central Government |
| SGST | Intra-state transactions | State Government |
IGST is a unified tax that replaces the need for separate CGST and SGST for inter-state transactions.
IGST Calculation Examples
Let's look at a couple of examples to understand how IGST is calculated on credit card transactions.
Example 1: 5% IGST
If you purchase goods worth ₹1,000 with a 5% IGST rate:
Example 2: 18% IGST
If you purchase services worth ₹5,000 with an 18% IGST rate:
These examples show how IGST is added to the transaction value based on the applicable rate.
FAQ
Is IGST applied to all credit card transactions?
No, IGST is only applied to inter-state transactions of goods and services that are subject to GST. Transactions within the same state will have CGST and SGST instead of IGST.
How do I know if IGST is applied to my credit card transaction?
You can check your credit card statement or the merchant's invoice. If the transaction involves goods or services supplied from another state, IGST may be applied. The tax amount will be clearly indicated on the statement or invoice.
Can I avoid paying IGST on credit card transactions?
IGST is a mandatory tax on eligible transactions. However, you can choose to pay the tax in cash if you prefer, but this is not common. Most transactions are paid via credit cards, and the tax is included in the amount charged.
What happens if the IGST rate changes?
If the IGST rate changes, the new rate will apply to future transactions. The tax amount will be recalculated based on the new rate. It's a good idea to check the latest IGST rates before making large purchases.
Is IGST refundable if I return a product?
Yes, if you return a product, the IGST paid on the purchase will be refunded along with the product price. The refund amount will be adjusted to exclude the IGST if the product is returned within the specified period.