Fuel Surcharge Waiver on Credit Cards in India

By | May 2, 2016

Ever wondered what the hell is Fuel surcharge when you swipe your credit card to fill fuel? There is something called transaction charge when a credit card is used anywhere online or offline. This charge is usually around 2%-3% of what you pay and the same is absorbed by the merchant where you swipe the card.

Fuel Surcharge Waiver on Credit Cards in India

Fuel Surcharge Waiver on Credit Cards in India in

Fuel Surcharge is a Card Transaction Charge

But as Fuel business operate in a very low margin, they can’t absorb this transaction charge as it hits their profit margin. So the transaction charges used on fuel purchases are now passed on to the customer, so the fuel station can receive 100% of what a customer pay.

Now this transaction charge that you pay in addition to actual charge is called fuel surcharge which is usually 2.5% and is actually little more as service tax is levied on this surcharge.

If you need to fill fuel for Rs.1000 via your credit card, this is what you need to pay.
= Rs.1000+ Fuel Surcharge + S.Tax on surcharge
= Rs.1000 + Rs.25 + Rs.3.63 = Rs.1028.63

Fuel Surcharge Waiver on Credit Cards

Now you could have seen many credit cards with fuel surcharge waiver benefit. What they don’t mention is that they don’t waive the Service tax levied on Surcharge.

For example, if you spend Rs.5000 on fuel every month for a year, you spend extra Rs.1500(Surcharge)+Rs.217(S.tax) = Rs.1717 per year.
Here, Rs.217 would be the S.tax which will not be waived off by the banks.

That isn’t a big number though, but you can save this by paying cash for fuel instead. I’ve made a point in my spending habit that unless or until am running out of cash, i won’t use the card for fuel purchases. Penny saved is Penny earned 🙂

Surcharge Waiver has higher cap on Premium & Super Premium cards:

Most credit cards waive of fuel surcharge within a certain limit per transaction. Usually waived on Rs.400-Rs.5000 Fuel bill with a maximum cap of around Rs.250(surcharge) per month.

It varies from card to card though. For example, on HDFC Regalia maximum cap on Surcharge that can be waived is Rs.500, whereas on HDFC Infinia its Rs.1000

Looking for cashback on your fuel spends apart from surcharge waiver?
Check out my latest list of 5 Best Fuel Credit Cards in India with full Reviews.

What’s your opinion on Fuel surcharge? Do you use credit card for fueling your car/bike or do you prefer cash?

28 thoughts on “Fuel Surcharge Waiver on Credit Cards in India

  1. Mayank Negi

    Indian Oil Citibank Credit card waves off the entire amount including service tax. Additionally you earn 4 points (4 rupees) for every 150. I hold this card for the last 6 years.

    Reply
    1. HARI LOSARI

      But this Citibank credit card is only benefit if the IOC petrol bunk is listed under CITIBank list or else you have to pay surcharges even though its a IOC.
      Vijayawada IOC petrol bucks are not listed in CITIBANK so i have to pay more money.

      Reply
  2. Ankit Khanna

    Hello Siddharth,

    I recently made a fuel transaction on my Regalia card for Rs. 500.00/-. As per the offer, I should be getting 0% fuel surcharge waiver. But the statement end up showing Rs. 501.77 against the transaction made. When I inquired about the same, the customer care said, every transaction you will do, you have to pay surcharge @ 2.5% and service tax over that.
    How much transaction is applicable to get a waiver of surcharge and service tax? How to avail maximum benefits from the card? Any help shall be highly appreciated.

    Regards

    Reply
    1. Siddharth Post author

      Ankit,
      They generally take 30-60 days to refund the fuel surcharge waiver.
      Just wait for sometime and everything should be fine i suppose.
      I have no idea how it shows Rs.1.77 extra as its not 2.5% of Rs.500 either.

      To fix anything with HDFC, never call their customer care.
      Either email them or hit them on twitter.

      Reply
      1. Ashish gupta

        The Rs 1.77 charged is 14%/14.5% (Service Tax) of the 2.5%(Rs 12.5) surcharge that was charged and waived of for Rs 500 spent on fuel.

        As per the credit card fuel transaction rules they charge 2.5 Fuel surcharge 2.5% and service tax over that but fuel surcharge is waived off but the service tax stays.

        Only ICICI waives off the whole Surcharge + Service Tax if and only if you use it at a HP petrol pump & swipe your card only on ICICI Card machine.

        Reply
    2. sreeram

      Dear Ankit Khanna,

      In hdfc credit card, they only waive off the fuel surcharge for the transaction and not the service tax on the surcharge.
      For instance you have spent Rs. 500 for petrol. So the calculation goes like this

      500 X 2.5% — Surcharge which amounts to 12.5. (Which is waived off)
      Now 12.5 X 15% as Service tax on surcharge amounts to 1.77 (which is not waived off)

      So your total card outstanding for the transaction amounted to 501.77.

      regards
      sreeram

      Reply
  3. Vinod Kannan

    Amex credit card provides surcharge waiver along with service charge waiver till 25000(Twenty five thousand) per day on fuel spends at all HPCL petrol bunks, on any bank POS machines unlike citi indian oil credit card which waives off surcharge only when swiped at Citi bank terminals.

    Reply
  4. A. P. Shah

    Siddharth,
    Loved all your card reviews. I am also using regalia for last more than 2 years. Usually I use Indian Oil Citibank card for my fuel needs but recently had to use regalia card. When statement came, it showed reversal of surcharge but service tax was not waived off. I took up this with HDFC customer care and got standard reply that service tax is not reversible. Escalated to nodal officer and got reversal of the service tax also. I was browsing through team-bhp credit card thread and found such comments in 2014 also. In simple words, if you are not vigilant you are taken for the ride in name of service tax. HDFC reverses service tax only where customer has raised a complaint. This is pure loot as such small amount from lakhs of customers becomes huge earnings for them.
    Please try to address this issue in your future writings.

    Reply
    1. Siddharth Post author

      True that,
      They do reverse most charges when you escalate it. But yes, not everyone will spend time to do that, so bank will keep enjoying the money. I’ll make sure to mention this wherever required.

      Reply
  5. Ashish Bhansali

    I faced the same issue when using Regalia card. Before this credit card, I used the Platinum debit card from HDFC with 0% surcharge. They used to debit the surcharge along with service tax but credited the entire amount again into the account after some days. Surprising, the double standards for credit and debit cards

    Reply
  6. Vishwa Arya

    I am using Kotak Credit Card. Fuel surcharge is waived automatically. But to seek waiver on service tax I need to call the company every month. Though it does not commensurate with the time consumed in requesting such waiver but technically speaking one is entitled to the waiver on making such request.

    Reply
  7. ARKA DAS

    Siddharth

    I used ICICI HPCL CORAL credit card. All surcharge charged are waived of including of ST. Also got 2.5% cash back + 5payback/100Rs.

    FOR EXAMPLE evry ₹1000 of HPCL I have to pay net ₹975 and earned 50payback point.

    Reply
  8. Saurabh Gupta

    Any corporate/business cards give 100% waiver on surcharge on fuel with no limit?

    Reply
  9. Vipin

    I’m still confused how this is calculated. I have filled for 100 rs in Indian Oil and paid via HSBC platinum CC. When I checked the statement they took around 111.50. So, its not 2.5% surcharge and 15% service tax. I have called the customer care few times and they asked me to Google or ask the vendor about any extra charges and disconnected the call. I don’t know why they disconnected the call as it is not professional and not expect such behavior from HSBC. Anybody has any idea how it is calculated.

    Reply
    1. Venkatesh

      Fuel surcharge is Rs.10 or 2.5% of the transaction amount, whichever is minimum. And service tax is 15% of surcharge. So in your case minimum among the two, i.e. Rs.10 is applied as surcharge and Rs.1.5 applied as service tax. Hence you needed to pay 111.50. However bank will refund the Rs.10 surcharge, typically within 48 to 72 hours. Service tax is not refundable. However as per Gov of India’s recent initiative if payment for fuel purchase is made digitally, you will get 0.75% cashback. In you case its 0.75%*100 = Rs 0.75. So effectively you paid 0.75 extra!. If you do the maths you realize that you need to purchase fuel for an amount of Rs.200 so that there will be no extra money you need to pay for digital payment. And if you purchase more than Rs.200/-, you will infact save money if you pay digitally. Another related information is that if you use ICICI card and purchase fuel from HP outlets + swipe on ICICI terminals, then they will not charge the service tax as well is what i heard.

      Reply
  10. Shashank

    Hi.
    I am living in pune & looking for a credit card. My monthly expenditure on card will be 4000 on fuel, 2000 in supermarket, 1000 on dinning.
    Looking for a card which will waive off 2.5 % fuel surcharge + service tax on all petrol pumps, zero annual fee, zero renewal fee, easy reward point redemption.
    Pl suggest.
    Thanks

    Reply
    1. Ashokkumar

      Go for standard chartered super value titanium credit card, but they can give you lifetime free or not depends on the bank decision

      Reply
  11. Malavkumar Patel

    I usually fill my PAYTM wallet with HDFC Regalia Credit Card so i get reward on that and pay for fuel with PAYTM and get 0.75% cashback from government as well so 1.60% as reward and 0.75% as cashback so total of 2.35% savings.

    Reply
    1. Siddharth Post author

      Fill fuel with PAYTM? I’ve never done it.

      Reply
      1. Malavkumar Patel

        HP Petrol Pump in Ahmedabad (Sattadhar Area) accepts fuel payment via every digital wallet available in india like paytm, freecharge and mobikwick etc, So i pay via paytm.

        Reply
        1. Siddharth Post author

          Great. Even i saw the banner in HP Pump in my city but they said its still not live.

          Reply
  12. Bijendra

    dear sidhartha,

    recently i received sbi crdit card, so i want to know if i purchased petrol from petrol pump then how many extra rupees i have ti give.

    Reply
    1. Siddharth Post author

      Depends on the credit card variant.

      Reply
  13. Dr.Hardik Patel

    Hoe do you earn rewards points by spending on fuel on hdfc hdfc regalia credit card? I don’t think we get rewards points on fuel spending…i have same credit card…

    Reply
  14. Alex

    I’ve applied through HDFC bank online but I got a call from bankbazaar for documents collection.
    I’m surprised, to hear that application is processing through bankbazaar.

    Reply

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