Balance transfer charges in India: fees, interest and GST

A balance transfer on EMI in India carries four separate costs: a one time processing fee, monthly interest on a reducing balance, 18% GST applied to both of those, and a foreclosure charge if the plan is closed early. The headline monthly rate covers only the second of the four. This page sets out what each one is, using figures published by the banks and retrieved on 2026-09-03.

The processing fee

The fee is charged once, at the start, and it is not refundable. The spread across banks is much wider than the spread on interest rates.

SBI Card’s published terms state 0.75% to 1.00% of the transferred amount. HDFC Bank’s balance transfer fee is reported in secondary sources as 1% of the amount or ₹250, whichever is higher, quoted exclusive of GST. Axis Bank’s own charges page states a flat 2% subject to a minimum of ₹250 and a maximum of ₹1,500, while a secondary source describes 1.5% with the same ₹250 floor. Kotak’s terms state ₹349 per ₹10,000 or part thereof, which works out at roughly 3.5% with no upper cap at all.

Two structural details matter more than the headline percentage. A rupee minimum turns a small transfer expensive: a ₹250 floor on a ₹10,000 balance is 2.5%, not 1%. A rupee maximum does the opposite: Axis Bank’s ₹1,500 cap means a 2% fee stops rising above ₹75,000, so on ₹2,00,000 the effective rate falls to 0.75%. Kotak’s per ₹10,000 slab rounds upward on “part thereof”, so ₹10,001 attracts the same fee as ₹20,000.

Monthly interest and how it is annualised

Rates are quoted per month. Published plan rates sit between roughly 0.83% and 2% per month. SBI Card’s bands run 0.83% to 1.50% per month on the 3 month plan, which the bank annualises as 10% to 18% per year, and 1.04% to 1.67% per month on the 6 month plan, or 12.5% to 20% per year. Kotak publishes 18% per year on a reducing balance for its 6 month plan, which is 1.5% per month. Axis Bank’s EMI charges page states 1.75% per month on a monthly reducing balance, which is 21% per year.

Interest accrues on the reducing principal, not on the original amount. Six months at 1.25% per month on ₹1,00,000 produces interest of roughly ₹4,400, not ₹7,500, because the balance falls with every instalment. Flat rate arithmetic overstates the cost of an amortising plan considerably.

GST at 18%, applied twice

SBI Card’s Most Important Terms and Conditions state that tax at 18%, charged as 9% central plus 9% state or as 18% integrated tax, applies to all fees, interest and charges. Axis Bank’s EMI charges page is equally direct, stating 18% on the fees and interest charged. Both statements cover the two places tax lands on a balance transfer.

On the fee. A 1% processing fee on ₹1,00,000 is ₹1,000, plus ₹180 of GST, so ₹1,180 leaves the account before any principal is cleared.

On the interest component of each EMI. This is the part that is easy to miss. If an EMI carries ₹800 of interest in a given month, ₹144 of GST is added to that month’s statement. Across a 6 month plan on ₹1,00,000 at 1.25% per month, the tax on interest comes to roughly ₹800 in total. A plan advertised at 1.25% per month therefore costs about 1.475% per month in cash terms.

GST is charged on the interest on the old card too, so it is not a reason on its own to avoid a transfer. It is a reason to compare after tax figures on both sides rather than comparing a post tax plan against a pre tax revolving rate.

Illustrative all-in cost of a ₹50,000 transfer

The table below is illustrative. It uses a single rate of 1.25% per month and a 1% processing fee across all three tenures so that the effect of tenure alone is visible, and it is computed with the site’s own formulas rather than quoted from any bank. Real offers vary by bank, tenure and customer.

Three things are visible in the table. The fee is identical across all three tenures, so it weighs far more heavily on the short plan: ₹590 is 28% of the total cost of the 3 month plan and 11% of the 12 month plan. Interest roughly triples from 3 months to 12 while the monthly instalment falls to a quarter, which is the trade being made. And GST adds about 18% on top of every interest figure in the table, which is not a rounding error.

The comparison that actually decides the question is against the revolving alternative. At a card rate of 3.75% per month, which SBI Card’s MITC states for unsecured cards, ₹50,000 accrues about ₹1,875 of finance charges in a single month, plus GST. Twelve months of the plan above costs less in total than about three months of revolving at that rate.

Foreclosure and late payment charges

Foreclosure. SBI Card publishes 3% of the outstanding principal plus applicable taxes. Secondary sources describe about 3% of the outstanding principal at HDFC Bank and 3% subject to a minimum of ₹300 at Axis Bank, with free cancellation windows reported as 3 working days and 10 days respectively. The charge falls on the principal still outstanding, so foreclosing early in a long plan is expensive in absolute terms.

Late payment. The EMI is included in the minimum amount due in full, so missing the minimum on a card carrying a plan triggers the card’s standard late payment charge, which is banded by outstanding amount in the MITC, plus GST on that charge. It does not usually cancel the plan, but it adds a charge and reports to the credit bureaus.

The RBI rules that constrain all of this

The Master Direction on Credit Card and Debit Card Issuance and Conduct Directions, 2022 sets three limits that matter here.

Interest rate ceiling and justification. Card issuers must prescribe a ceiling rate of interest, including processing and other charges, in respect of all credit card dues, and the rate charged must be justifiable having regard to the cost of funds and the risk premium. Different rates for different customer categories are permitted, but they must be published.

Annualised disclosure. Rates have to be disclosed on an annualised percentage rate basis, not only as a monthly figure. This is the line to find in the MITC when comparing a plan quoted at 1.25% per month against a card quoted at 45% per year.

Minimum amount due and negative amortisation. The minimum has to be set so that it does not result in negative amortisation, meaning the balance cannot grow while minimum payments are being made. Separately, unpaid charges, levies and taxes cannot be capitalised for the purpose of charging interest. Neither rule makes minimum paying inexpensive, and neither one applies a ceiling to the processing fee.

The mechanics of the product and a comparison of what each bank publishes cover the other half of the picture, and the India calculator runs the arithmetic on real numbers with GST included.