Question 1

How is interest calculated on Credit Card EMI conversion?

Accepted Answer

Issuer EMI plans can use a reducing-balance rate, a flat-rate presentation or another disclosed method. Use the issuer’s annual percentage rate, processing fee, GST treatment and amortisation schedule; there is no universal 14%–24% range.

Question 2

Is 18% GST applicable on Credit Card EMI interest and processing fees?

Accepted Answer

Tax treatment depends on the issuer’s supply and invoice. Issuers commonly show GST on processing fees and applicable EMI finance charges, but the taxable base, timing and current rate should be taken from the card statement, tax invoice and issuer terms rather than assumed for every instalment.

Question 3

What is No-Cost EMI on credit cards and how does it actually work?

Accepted Answer

A “no-cost EMI” commonly offsets some disclosed finance cost through a merchant or issuer discount, but processing fees, taxes and the discount calculation can leave a residual cost. Compare the cash price, total instalments and tax invoice for the exact offer.

Question 4

Do I lose the interest-free grace period on new purchases during an active EMI?

Accepted Answer

The interest-free grace period generally depends on paying the full Total Amount Due by the due date. Paying only the Minimum Amount Due avoids immediate delinquency but usually does not preserve the grace period; issuer terms determine how an active EMI and new purchases are billed.

Question 5

How does credit card EMI impact my credit utilization ratio and CIBIL score?

Accepted Answer

An EMI conversion can continue to occupy part of the credit limit and affect reported utilisation. Payment history is important, but no action guarantees a score increase because bureau models use multiple factors.

Month	Opening Balance	EMI	Principal	Interest	Closing Balance
Month 1	₹1,00,000	₹9,073	₹7,740	₹1,333	₹92,260
Month 12	₹8,953	₹9,072	₹8,953	₹119	₹0

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