Interest calculation

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pankaj (Querist)
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07 February 2015 if we doesn't deopsit service tax of march 2014 on 500000 then according to new rules what is the interest calculation on this?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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07 February 2015 From due date to 30.9.2014 @ 18% simple interest.
From 1.10.2014 to 7.2.2015 @ 24% simple interest.

Ps:- If payment date is on or after 5-4-2015 interest has to be calculate @ 30% from 1.10.2014 to the date of payment.

pankaj

pankaj (Querist)
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07 February 2015 sir interest calculation is from due date or date or month in which defaults occurs like in tds
for eg march tds is not depositd and paymnet is in 30.09.2014
so interest in this for the 7 months included march also
jst like that this also occurs in service tax calculation nothing is written about the interest is calculated from the due date

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RENGARAJ R.K

RENGARAJ R.K (Expert)
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07 February 2015 March tax is payable on 31st march for all categories. Therefore interest will have to be worked from 1st April onwards.

18% upto 30th sep and 24% from 1st oct upto march 2015.

pankaj

pankaj (Querist)
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09 February 2015 sir interest calculation is from due date or date or month in which defaults occurs like in tds for eg march tds is not depositd and paymnet is in 30.09.2014 so interest in this for the 7 months included march also jst like that this also occurs in service tax calculation nothing is written about the interest is calculated from the due date

pankaj

pankaj (Querist)
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10 February 2015 B.Chackrapani Ji and Rengaraj R.K.sir please reply my query of above about the default ?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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01 August 2024 In the case of Service Tax (now GST, if the period is post-July 2017), interest is calculated differently compared to TDS. Here’s how you should approach it:

### Interest Calculation for Service Tax

1. **Interest Calculation Period**:
- **Due Date**: The interest on the service tax is calculated from the due date of payment until the actual date of payment.
- **Default Period**: For calculating interest, you consider the period from the due date of the tax payment to the date on which the payment is actually made. This includes the months in which the default occurred.

2. **Interest Rate**:
- The rate of interest for delay in payment of service tax is specified in the relevant Service Tax rules and could be subject to changes based on notifications or amendments issued by the government.

3. **Calculation Example**:
- If you did not deposit service tax of ₹5,00,000 for March 2014, and the payment was made on 30.09.2014, you would need to calculate the interest from the due date (typically by the 5th or 6th of the month following the relevant month, depending on the rules applicable) until the actual payment date.
- In your case, you would calculate interest from April 5, 2014, (assuming the due date is the 5th of the next month) to September 30, 2014.

4. **Calculation Formula**:
- **Interest Amount** = Principal Amount × Rate of Interest × Number of Days Delayed / 365

### Example Calculation:
- **Principal Amount**: ₹5L
- **Due Date**: April 5, 2014
- **Payment Date**: September 30, 2014
- **Number of Days Delayed**: From April 5, 2014, to September 30, 2014.

If the interest rate is, say, 18% per annum:
- **Interest** = ₹5L × 18% × Number of Days Delayed / 365

You can use this formula to calculate the interest manually or use online interest calculators available for service tax.

### Summary
Interest on service tax is calculated from the due date of the tax payment until the actual date of payment, not just for the month in which the default occurred. The calculation includes the entire period of delay.