During festivals like Diwali, understanding the tax implications of credit card spending is crucial. Goods and Services Tax (GST) applies to goods and services, with rates ranging from 5% to higher percentages for luxury items.
To calculate GST, identify the applicable rate and multiply it by the total cost of the purchase. Income tax may apply to rewards and cashback received from credit cards, treated as income.
Include the value of these benefits in your annual tax return. To minimize tax impact, maintain records, be aware of GST, explore potential deductions, and manage rewards wisely. Enjoy the festivities while being tax-savvy!