Forex markup on credit cards in India: fees, GST and how to avoid them
A forex markup fee is an extra charge your bank adds when you buy something in a foreign currency using your Indian credit card. This fee usually ranges from 1.5% to 3.5% of the transaction amount. You also pay an 18% GST on this fee. Learn how these charges work and how to avoid them.
By Qrates research desk · 2026-10-27
Quick answer: What is a forex markup fee?
Banks charge a forex markup fee to cover the cost of converting Indian Rupees into a foreign currency. This fee typically ranges from 1.5% to 3.5% of the transaction amount. It applies whether you swipe your card at a shop in Dubai or buy software from an American website while sitting in India.
The fee is a percentage of your total purchase. If you spend more, the fee increases.
The real cost of international credit card transactions
When you use your credit card in another currency, three different charges decide your final bill.
The network exchange rate
Visa or Mastercard sets the base exchange rate for the transaction. This rate is based on the day the card network settles the transaction. The settlement date is often a few days after your actual purchase date.
This means the exchange rate on your bill might look slightly different from the rate on the day you bought the item.
The bank markup fee
Your bank then adds a cross currency markup percentage on top of that converted amount. This is the main fee that changes from one credit card to another. A few premium or travel cards offer a 0% markup fee. Most standard credit cards charge the maximum 3.5% fee. If you are looking for additional perks like airport lounge access on credit cards, ensure you check if your card also carries a high forex fee.
GST on the markup
The government charges an 18% Goods and Services Tax on the forex service. This 18% GST is applied strictly to the forex markup fee itself. It is never applied to the total foreign transaction amount. If your card has no markup fee, you pay no GST on it.
How forex charges are calculated: A ₹1,00,000 example
Assume you spend $1,200 abroad. The Visa exchange rate on the settlement day makes this exactly ₹1,00,000.
If your credit card has a 3.5% foreign currency markup fee, the bank adds ₹3,500 to your bill. An 18% GST is applied to that ₹3,500, adding another ₹630. Your total bill for the ₹1,00,000 purchase becomes ₹1,04,130.
| Charge type | Calculation | Amount |
|---|---|---|
| Base transaction | $1,200 converted at network rate | ₹1,00,000 |
| Forex markup fee | 3.5% of ₹1,00,000 | ₹3,500 |
| GST | 18% of ₹3,500 | ₹630 |
| Total billed amount | Final cost to you | ₹1,04,130 |
How to check your card and find zero forex markup options
Reading your statement under RBI rules
The Reserve Bank of India mandates that all unpaid charges, levies and taxes must be clearly indicated in billing statements (RBI Master Direction on Credit Card and Debit Card Issuance). If you struggle to identify these, learning how to read a credit card MITC document can help you spot hidden charges before they appear on your statement. You can check your latest statement to find your bank's exact markup percentage.
Finding a zero forex markup credit card
Some banks offer a markup waiver as a built-in feature to attract international travellers. For example, IDFC First Bank removed the forex markup fee across all of its credit cards in September 2026 (idfcfirst.bank.in). You can use the Qrates credit card finder to filter cards by their exact markup fee. This helps you find the lowest forex markup credit card in India for your spending habits.
Here is how to check your current card on Qrates:
- Open the Qrates credit card directory.
- Search for your exact credit card name.
- Scroll to the fees section to see the listed forex markup percentage.
Common mistakes that cost you extra abroad
The Dynamic Currency Conversion trap
Dynamic currency conversion happens when a foreign card machine asks if you want to pay in Indian Rupees instead of the local currency. Saying yes gives the foreign merchant the right to set their own exchange rate. This rate is almost always worse than the Visa or Mastercard rate. Your Indian bank may still charge a markup fee on this transaction, meaning you pay extra twice.
Forgetting the TCS rules
Many travellers worry about Tax Collected at Source on international credit card spending. The government proposed a 20% TCS on these spends under the Liberalised Remittance Scheme, but this was deferred in June 2023. As of 2026, international credit card spending abroad remains exempt from the LRS limits and carries no TCS. The ₹10 lakh threshold for TCS applies to other types of foreign remittances, not to swiping your credit card in another country. If you ever face issues with unauthorized charges or billing disputes, you can file a complaint with the RBI Ombudsman for resolution.
FAQs
How to avoid forex markup charges?
You can avoid these charges by using a zero forex markup credit card for all international purchases. You should also always choose to pay in the local currency at foreign card machines to avoid dynamic currency conversion fees.
Credit card par international charges kitne lagte hain?
Indian banks usually charge a forex markup fee of 1.5% to 3.5% on international transactions. You will also pay an 18% GST on this markup fee amount.
Is GST applicable on forex markup fee?
Yes, the government applies an 18% GST on the forex markup fee. This tax is calculated only on the fee amount, not on your total purchase amount.
Which credit card has 0 forex markup in India?
Several premium travel cards and all IDFC First Bank credit cards offer a zero forex markup fee as of September 2026. You can check the Qrates directory to see the exact fees for every card available today.
Does TCS apply on international credit card transactions?
No, international credit card spending abroad is currently exempt from the Liberalised Remittance Scheme limits. This means no Tax Collected at Source is applied to these purchases as of 2026.
The short version
- A forex markup fee is an extra 1.5% to 3.5% charge applied to international credit card transactions.
- The government charges 18% GST on the markup fee amount.
- Visa or Mastercard sets the base exchange rate on the day the transaction is settled.
- Choosing to pay in Indian Rupees at a foreign machine triggers a dynamic currency conversion trap with poor exchange rates.
- International credit card spending abroad is exempt from LRS limits and does not attract TCS as of 2026.
You can verify the latest forex markup fees for your specific card at qrates.in/cards.
Sources
- Radware Page (federal.bank.in)
- TCS on Foreign Travel Expense Remittance (With Budget 2026 Updates) - Wise
- Foreign Transaction Fees on Indian Credit Cards Explained | CardBuzz
- Best Debit Card for International Travel: Foreign Transaction Fees Compared, DebitCard.id
- Notifications | Official Website of Reserve Bank of India
- what is tcs on foreign remittances (upstox.com)
- Tax Collected at Source Compliance 2023-24
- Press Release IDFC FIRST Bank introduces Zero Forex Markup across all its Credit Cards existing and new (PDF, idfcfirst.bank.in)
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.