You can pay your tax with a credit card through the NSDL-TIN website. You have to fill out a challan and submit it online. Once you do this, you will be redirected to the bank’s website and you can pay your tax there. A challan counterfoil containing a corporate identification number will be given as digital evidence for tax payment. 

There are multiple benefits of paying your taxes with a credit card. The government wants to arrest the movement of fake currency and curb the flow of black money. This mode of payment helps in building your credit and creates credit history for you. This will also make you eligible for further credit in future. This method of tax payment is easy and quick. It will also help in tax evasion among individuals. 

What Are The Advantages of Paying Taxes With A Credit Card? 

  • You will get digital evidence for paying tax via credit card in the form of an online challan. 
  • This challan can be downloaded anytime and it comes with a corporate identity number that can be preserved for future reference.  
  • The government of India has launched  ‘PayGov India’ - An integrated payment gateway to make all kinds of payments including tax using credit cards online. This system will standardize and make the payment of tax easy. 
  • A reduction of 1% or 2% VAT will be given on cashless transactions. 
  • Individuals can remit the tax anytime from anywhere provided they have a desktop.
  • Individuals can transact at gas agencies, petrol pumps, and for railway tickets at zero transaction charges.
  • Tax rebates will be given on transactions done via credit cards to pay utility bills. 
  • An additional 50% tax rebate will be given to people who have transacted up to 50% using their credit cards.
  • The Merchant Discount Rate is a fee that banks give to merchants for accepting payments via credit or debit cards. The government has further proposed a decrease in MDR to encourage payments via debit/credit cards. 
  • The interchange fees on credit/debit cards will be standardized across the nation for better adaptability.
  • If a person pays TDS through credit card, both the person and the government will have an accurate record and transaction history of the payment made. 

Steps For Income Tax Payment Via Credit Card

  • Login to the NSDL-TIN website 
  • The individual will have to choose the challan applicable to him/her 
  • The taxpayer will have to enter the PAN/TAN as applicable. An online verification of the PAN/TAN will be conducted.
  • After the PAN/TAN is authenticated, the taxpayer will be allowed to fill up the challan details, such as the bank through which the payment is being made, the accounting head under which the payment is being done, name and address of the TAN/PAN, etc. 
  • A screen showing the confirmation will appear after you submit the data. Once the taxpayer authorizes the data entered, he/she will be forwarded to the net-banking website of the bank.
  • The taxpayer will have to log in to the net-banking site with his/her user ID and password to enter the payment details for the transaction.
  • A challan counterfoil will appear as the digital proof for tax payment. It will contain the CIN, the transaction amount, and the bank through which the payment was made. 

How To File TDS on the GST Portal? 

Certain people must deduct TDS while paying the suppliers. The deduction of TDS will be 2% on the payments,  where the total value of supply for an individual contract is more than Rs. 2,50,000.  If the location of the supplier is different from the state of registration of the recipient, no TDS deduction is required. TDS under the GST portal is filed under the form GSTR-7. The steps to file the same are as follows: 

  • Go to the official website of the GST portal and log in. 
  • Choose the financial year and return the filing period. 
  • Enter the required details and then go back to the TDS page. 
  • Again fill details and make the payment using your credit card.
  • If your payment is successful, a message of confirmation will be displayed on the screen. 

FAQS What Are The Benefits Of Paying Your Taxes With A Credit Card

1:What are the two downsides to paying taxes with your credit card?

The downsides are:

When the fees is more than the rewards, it is not beneficial 

  • Interest charges
  • Higher credit utilization

2:Do credit cards affect tax returns?

Credit card debt will not preclude you from getting your tax refund. But, it will have an impact on how much of a refund you receive if you settle your debt. If you feel that you will have to pay taxes due to debt settlement, start saving now itself. 

3:What is the best way to pay taxes?

  • The best way to pay the tax bill is to borrow the money. This is a great option if you have someone willing to loan you the money especially with no interest. 
  • You can pay via a credit card and then pay the outstanding amount as the bill.
  • You can request the IRS for more time, if you don't have the required money currently.