There are two provisions under Finance Act, 1994 dealing with interest on delayed payment as given below:
|
Sl. No |
Situation |
Section No. |
|
1 |
Amount collected as service tax, not liable to pay and not deposited with the government. It is customary under indirect taxes that whatever is collected as tax from the customer shall be invariably deposited with the government. The assesse can neither keep it with him nor can he return the same to the party from whom he received. If he fails to deposit such amount, it will attract interest. Similar provision is there under Excise also. (Vide Section 11DD of Central Excise Act, 1944) |
Section 73B |
|
2 |
Delayed Payment of Service Tax: Section 75 empowers the Central govt. to impose interest on delayed payment at the rates between 10% and 36%. 3% concession is available to the assesses whose turnover in the previous year or notice period was not above 60 lac. rupees. Govt. notifies and revises the interest rates from time to time considering the prevailing bank rates. Recently the interest rates have been revised through notification No. 13/2016 dated 1-3- 2016 effective from 14th May, 2016 |
Section 75 |
The following table shows the change in interest rates:
|
Section No. |
Existing Rates |
New Rates |
|
S. 73B |
18% |
15% ( Notification No. 14/ 2016) |
|
S.75 |
18%, 24% and 30% |
24% and 15% ( Notification No. 13/ 2016) |
Evolution of Interest Rates under Section 75 of Finance Act, 1994
|
Period |
Rate of Interest |
Remarks |
|
1-7- 1994 to 15-7-2001 |
1.5% per month or part thereof |
It was a monthly rate and part of the month was to be treated as a full month |
|
16-7- 2001 to 15-8- 2002 |
24% per annum |
increased |
|
16-8- 2002 to 9-9- 2004 |
15% |
reduced |
|
10-9- 2004 onwards up to 30-9-2011 |
13% |
Reduced further |
|
1-10-2011 to 30-9-2014 |
18% |
Increased with 3% concession to persons upto the turnover of 60 lac |
|
1-10-2014 to 13-5-2016 |
18%, 24% and 30% Slab rates |
18% for first 6 months; 6 months to one year—24% Beyond one year—30% 3% concession continued. |
With effect from 14th May, 2016, the interest rates under Section 75 are as given below:
|
Section 75 |
Situation |
Rate of Interest |
Concessional Rate |
|
Service tax collected but not paid to Govt. |
24% |
21% |
|
|
Other cases |
15% |
12% |
Note: These changed rates are not applicable to students appearing in November, 2016 Exams.
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