Late payment of interest on service tax

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SIRISHA (Querist)
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26 February 2016 sir,
A firm is engaged in construction/ development of residencies/ buildings.In the case of advance received on sale of flat but registration is not done yet, service tax is not paid on such advances but paid after date of registration and completion of service. Can u pls help me with the interest calculation on delay of service tax on advances and dates to be taken for such calculation.

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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28 February 2016 In the case of Construction of Residential Complex Services, service tax is payable on the amounts received from the flat / unit owners till the receipt of Completion Certificate from the concerned authorities. The liability for service tax arises on receipt of money or date of invoice, whichever is earlier. In case the firm issued invoices, it is liable for payment of service tax on the date of invoice. If no invoice is issued, it is the date of receipt of money. Hence depending on the practice of the firm the interest on delayed payment has to be done as under:
For this illustration the service tax amount is taken as X. For amounts due before 1st October 2014
(X*18%/365)* No.of days till 1st October 2014
(X*24%/365)* No. of days after 1st October 2014 in excess of 180 days
(X*30%/365)* No. of days after 1st October 2014 in excess of 365 days

In case the liability rose after 1st October 2014, the interest calculation would be as under:
(X*18%/365)* 180 days
(X*24%/365)* 185 days
(X*30%/365)* No. of days in excess of 365 days