24 March 2015

[Credit Card] What are the Changes after GST implementation?

For credit card holders, there is confusion on how GST is being charged. Over here, we are talking about the service tax and annual fee. Currently, there is a RM50 service tax on principal card holder and RM25 service tax on supplementary card holder. After 1 April 2015, this service tax will be abolished due to the implementation of GST.


How about the annual fee?

However, 6% GST will be imposed on the credit card annual fee which ranges from RM50 up to RM500, depending on the type of card. For example, for a RM50 annual fee, there will be an extra RM3 GST charge on it, resulting to a total of RM53 when renew.

Anyway, most of the banks will waive the annual fee if card holder meet certain minimum requirements, or card holder can utilized their loyalty points or rebates to offset the 6% GST.

How about late payment or finance charges?
Late payment charge means card holder fails to pay at least the minimum monthly charges when due. Meanwhile, finance charge means charges imposed on outstanding balance which has not been settled. The good news is BOTH of these charges will NOT be burden by the 6% GST charge.


Do I have to pay GST each time I swipe my card?

Be it debit or credit card, there is NO additional GST charge each time you swipe. For example, if the bill is RM100, the amount swipe is still RM100 instead of RM106 as being speculated.


But, I saw 10% service tax.
What's that? Will it be abolished also?
We need to be clear over here. The normal 10% service tax stated in many bills such as restaurant and hotels booking is actually a form of tips for their employees who serve us well. In order not to make everyone confuse, government already started to instruct all business operators to change the word "service tax" to "service charge". Since this is not a form of tax, customers are not obliged to pay service charge. Just bear in mind, that's actually a form of tips. If you think that the service is not good, why paying them?

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