How credit card annual fee waivers work: rules, exclusions and GST

A spend-based fee waiver cancels your upcoming credit card renewal fee if you spend a set amount in the previous year. Learn how these waivers work, why rent and EMI payments often do not count, and how to request a fee reversal from customer care if you miss the target.

By Qrates research desk · 2026-11-01

A spend-based fee waiver automatically cancels your upcoming renewal fee if you spend a set amount in the previous 12 months. If you miss the target, the fee appears on your statement, but you can sometimes get a fee reversal by calling customer care. Many cards leave rent payments and wallet loads out of the spend target, and banks change these lists, so check your own card's terms.

What a credit card annual fee waiver is

A credit card annual fee is a recurring charge billed to your account every year. Banks offer a waiver on this fee to encourage you to use the card for your daily expenses.

Lifetime free credit card vs fee waiver

A lifetime free card has no annual fee at all. A fee waiver card charges a fee unless you meet specific spending criteria during the year.

Card type	How the fee works	Target user
Lifetime free	No joining or annual fee is ever charged.	First-time users or low spenders.
Fee waiver	An annual fee is charged unless a spend target is met.	Regular spenders who can hit the milestone.

You never have to track your spending to keep a lifetime free card free. With a fee waiver card, you must monitor your eligible purchases to ensure you cross the required threshold.

The difference between a fee waiver and a fee reversal

A waiver happens automatically before the bill is generated. The bank system detects that you hit the spend milestone and simply does not apply the renewal charge. You usually will not see the fee on your statement. Some banks, such as Axis Bank, describe this as a spend-based reversal of the fee.

A reversal happens after the fee hits your statement. You usually get a reversal because you asked customer care to remove the charge. The bank bills the fee, and then issues a statement credit to cancel it out.

How spend-based fee waivers work

Banks calculate your total eligible spending over a set year. Axis Bank uses the card anniversary year, and SBI Card uses the preceding year. Your card's terms say exactly when this year starts.

How the billing cycle and posting dates affect your target

If your card has a ₹500 fee waived on ₹1,00,000 of spend, you must hit that target before the qualifying year ends.

On some cards, only posted transactions count towards your milestone. The IndianOil Axis Bank terms say only transactions "settled and posted" in the card anniversary year are considered. A purchase made on the last day of your card year might post to your account later. This delay can cause you to miss the cutoff and trigger the annual fee.

Do EMI transactions count for annual fee waiver?

EMI transactions are excluded on some cards, such as the IndianOil Axis Bank card. If you buy a ₹50,000 laptop and convert the transaction into monthly instalments, that ₹50,000 may not count towards your target.

Reversals do not count either on cards with this rule, such as the IndianOil Axis Bank card. If you buy a ₹5,000 shirt and return it, that amount may not count towards your target.

What to check in your own case: 2026 rule changes

Banks update their terms and conditions regularly. A transaction that helped you waive your fee last year might not count this year.

Excluded spends like rent and wallet loads

You must check your bank terms for excluded categories. For example, the Axis Bank Privilege card excludes utilities and telecom, rent, wallet, government services, insurance, gold and jewellery, fuel, education, gift cards, and bridge and road tolls. Axis Bank's card terms say gift card spends are also excluded from August 28, 2026. On a card like this, paying your ₹20,000 monthly rent by credit card will not help you reach your annual target.

You can check the exact spend-based waiver targets, excluded categories, and renewal fees for your specific card in the Qrates credit card directory.

Is GST refunded when a credit card fee is reversed?

An 18 percent GST applies to the annual credit card fee (SBI Card terms). If your renewal fee is ₹1,000, the bank will charge an additional ₹180 as tax. This brings the total deduction on your statement to ₹1,180.

We could not find an official bank page that says whether the GST also comes back when a fee is reversed. When you ask for a reversal, ask customer care if the ₹180 will be credited too. Then check your next statement.

Common mistakes when trying to avoid the annual fee

Tracking your spending manually can lead to errors. Many users fall short of their milestone because they misunderstand how banks calculate the total. To avoid surprises, learn how to read a credit card MITC document to find hidden charges.

Missing the spend milestone by a few rupees

Assuming a transaction date is the posting date can leave you short of the spend milestone. Always check your unbilled transactions a week before your card anniversary. If a recent large purchase has not posted, you might need to make an extra transaction to be safe.

Paying the fee late while waiting for a reversal

If you see a fee and ask for a reversal, you must still pay the minimum due by the due date. Failure to pay the minimum amount due on a credit card triggers late payment charges (ICICI Bank).

Repeated late payments can hurt your credit score. RBI lets a bank report an account as past due or levy late charges when it stays past due for more than three days. Always clear your dues while waiting for customer care to process a reversal request.

How to ask customer care to reverse a credit card fee

If you miss your spend milestone, you can still ask the bank to reverse the fee. The bank decides, and some terms limit these requests. If you are using newer payment methods, be aware of RuPay credit card on UPI limits and charges as these may impact your overall card utility.

Asking for a reversal

Call customer care and ask them to reverse the fee.

Call the customer care number on the back of your card.
Ask the representative to reverse the annual fee.
Note the service request number if they agree to process a reversal.
Pay your minimum due while waiting for the credit to appear.

Card cancellation and retention offers

If you ask to cancel the card after the fee is levied, the bank might offer a fee reversal as a retention offer. If you accept the offer, the card remains active and the fee is credited back to your account.

If you decide to proceed with the cancellation, RBI says the bank must honour the request within seven working days, once all dues are paid. If it is late, it owes you ₹500 per calendar day. A separate rule covers a card you never activated. After 30 days from issue, the bank must ask for your consent by OTP. Without consent, it must close the card at no cost within seven working days (RBI Credit Cards and Debit Cards Directions, 2025).

FAQs

What happens if I do not pay credit card annual fee?

The unpaid fee stays in your dues and can lead to late payment charges if you miss the minimum due. RBI says banks must not levy interest or other charges on unpaid taxes, levies or charges. Repeated late payments can hurt your credit score. Pay at least the minimum due to keep your account in good standing.

Credit card ka annual fee kaise maaf karaye?

You can avoid the fee by meeting the annual spend target set by your bank. If the fee is already billed, you can call customer care and request a fee reversal.

Annual fee lagne ke baad credit card band kar sakte hai?

Yes, you can ask to close your credit card at any time. The bank must close it within seven working days once all dues are paid. If you cancel shortly after the fee is levied, you can ask the bank to reverse the charge as part of the closure process. If you are looking for a better card, find a credit card for your spending to compare options.

The short version

A spend-based waiver automatically cancels your annual fee if you hit a specific spending target during your card year.
Many cards do not count rent, wallet loads, or EMI conversions towards this spend milestone. Check your own card's list.
An 18 percent GST applies to the annual fee. If the fee is reversed, ask whether the GST is credited too.
You must always pay your minimum due by the due date, even if you are waiting for customer care to reverse an annual fee. You can also check how airport lounge access on credit cards works in India to ensure you are getting full value from your card benefits.

Sources

Disclaimer

Qrates is an information directory. It takes no commission from any company listed and does not recommend products. Figures are taken from the sources named and dated, and they change; check the company's own page before you decide. This is not investment, credit, insurance or tax advice for your situation. Card approval, limits and fees are decided by the issuing bank.