When it comes to saving taxes, credit cards can be handy tools. Leveraging credit cards for tax-saving purposes can be a prudent approach, provided it’s done judiciously. This method not only facilitates tax savings but also offers additional perks such as rewards and cashback. Here’s how you can make the most of them in simple terms:

Putting money in an NPS Tier I account helps you save on taxes. You can get an extra deduction of up to Rs. 50,000 under Section 80CCD (1B). You can use your credit card for this. But keep in mind, there are transaction charges of 0.90% plus GST. However, you can earn reward points with your credit card, which can help cover some of these charges.

Invest in NPS Tier I Account 80CCD

Having health insurance is crucial, and it also helps you save taxes. You can pay for your health insurance using your credit card without any extra charges. Plus, you earn reward points for doing so. You’ll be eligible to avail tax deduction under section 80D of Up to ₹25,000 paid for self, spouse, dependent children or parents and up to ₹50,000 if family or your parents are senior citizens (60 years and above)

Pay Health Insurance Premium 80D

Similar to health insurance, you can use your credit card to pay for life insurance premiums. Most companies won’t charge you extra for this, and you still get the tax benefits. Plus, you earn reward points that can come in handy later.

Pay for Life Insurance 80C

The Income Tax Department has also introduced the feature of tax payment through Credit Cards. Hence if you ever fall short on cash you can utilize your credit cards in order to make the advance tax payment to save on interest and penalties arising from delayed payment.

The Image below shows the option available on the Income Tax Portal for payment of Tax Via Credit Cards.

All you have to do is choose your preferred payment gateway from the given options and make the payment by entering your credit card details on the next page like any other website.

Using your credit card for tax-saving purposes has positive side, it helps you invest in tax-saving options even when you’re short on cash. Additionally, you earn reward points that can offset some of the charges. However, sometimes, the charges for using credit cards can be higher than other methods. If you don’t pay your credit card bill on time, you might end up paying a lot in interest.

Advance Tax