13 February 2009
The assessee is a Pvt Ltd Co and comes under Works Contract in case of Service tax.The reteurn for Fin Yr 2007-2008 was filed on 25/8/2008 and the liab of Rs 380,243/- was paid on 25/8/2008.Needed to calculate the interest for the late payment of tax.Wt would be the amount of Interest.
13 February 2009
Indian Service Tax Interest On Delayed Payment
Rate of Interest upto 15/7/2001 - 18%.
Rate of Interest from 16/7/2001 to 15/8/2002 - 24%
Rate of Interest from 16/8/2002 to 9/9/2004 - 15%
Rate of Interest from 10/9/2004 to till date - 13%
Q. What is the rate of interest to be paid by the assessee, if he fails to pay service tax to the government within prescribed time limit?
Ans. The assessee is liable to pay simple interest at the rate of one and one half percent for every month or the part of the month by which such payment is delayed. .
Q. In case of delay in payment of Service Tax to the Government, the interest becomes payable under section 75 at the rate of 1.5% per month or part thereof. Whether the period of one month is to be computed from the due date prescribed under Sec. 68 that is 25th of the month in which the payment is due or it should be calculated as per calendar month?
Ans. In case of delay in making payment of Service Tax to the Government, the interest is payable at the rate of 1.5 % per month or part thereof. The period is to be calculated with reference to 26th of the month on which the interest becomes due. In other words, the period between 26th of the month and the 25th of the next months be taken as one month. Otherwise, the person making payment on 151 of the next month will have to pay interest for two months for delay of 6 /7 days, which is not the intention of the law.
Q. What is the date of payment of Service tax - is it the date on which the cheque for the same is deposited / tendered in the designated Bank or the date on which the amount is credited?
Ans.The date on which the amount is credited to the Central Govt. account would be considered as the date of payment.
Q. If 25th of any calendar month {i.e. the last date of making payment/filing returns) is Sunday or Bank/Govt. holiday & the payment is made/return is filed on the subsequent working day, would it be treated as delay and subject to interest & penalty?
Ans. No, the payment made/return filed on the working day following 25th of the calendar months which was a holiday, would be considered as having been paid/filed on time.
Q. The interest for delayed payment of Service Tax is payable @ 1.5% for every month or for the part of a month for delay in payment of Service Tax. If payment is delayed for one or two days, whether the interest is to be paid for the full month or only for one or two days, as the case may be.
Ans. The interest is to be levied u/Sec.75 @ 1.5% for every month or part of the month by which the payment is delayed. Thus, even for a delay by one day interest @ 1.5% is to be charged for full month and not to be charged on the basis of number of days.
Q. If any short payment of service tax is noticed after lapse of few months from the submission of returns, whether the assessee is liable to pay interest upto the date of assessment or from the date of submission of returns to the department?
Ans. If the short payment is noticed within six months /5 years as the case may be, from the date of filing of the returns, the interest @ 1.5% is required to be paid U/S 75, (as delayed payment) upto the date of actual payment of such short paid amount.
Q. Is the interest paid for late payment of Service Tax refundable, in case of excess payment?
Ans. Yes, Interest paid in excess of the tax actually due, which is only of an erroneous nature, is liable to be refunded.
Cir.No. 3/DGST/98-ST Date 16/11/1998
Sub:- Service Tax - Interest in case of delayed payment of Service Tax to the Government - Clarification.
As per Section 75 of the Chapter V of the Finance Act, 1994, the interest is to be charged at the rate of one & half percent simple interest per month or part of the month for which the payment is delayed. In case, where, the payment is due on 15th (as per the earlier provision)/or 25th of the month (as per new provision) and the payment is made on 1st ofthe next month, then there is delay of 16/17 days or 6/7 days respectively as the case may be, in making payment of Service Tax to the Government. In such cases, interest should not be charged for two months, rather, it is clarified that the period of one month should be considered with reference of 16th/26th of the month to the 15th/25th of the next month and the interest. should be charged for one month only.
Actual date of crediting [TN No. 132/96, dated 26/11/1996 of the Cochin Commissionerate]
Sub:- Service Tax - Actual date of crediting of Service Tax to the Book account of the Central Government to be taken for calculation of Interest and penalty.
Under Sections 75 and 76 of the Act an interest has to' be charged at the rate of 1.5% of every month or part of the month by which crediting of tax is delayed and penalty for failure to collectorpay Service Tax can also be imposed. In order to arrive at the calculation of interest and penalty under the Service Tax on telephones it has been decided that the first date on which book transfer is made in the cash section of Secondary Switching Area (SSA) as the date of crediting to the Central Government. Accordingly the proforma ST 3 and ST 3A prescribed under Rule 7 of Service Tax is revised which is enclosed alongwith this Trade Notice. Here after all Secondary Switching Areas who are paying the Service Tax on telephones by book transfer has to file the return prescribed under rule 7 of Service Tax in the revised proforma.
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