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how to determine the interest

11 February 2008

if anyone has paid the payment of S.T. late by 2 or 3 days then how to determine the interest on that it? what is the % for charging on the tax? If there has been made the return late then what is the penalty for that & how to make the payment? whether in the S.T. dept. or in the bank through challan?

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(Guest)

The rate of interest for delayed payment of Service tax is 13% per annum calculated on number of days it is delayed. It is to be paid by way of challan in bank and included in HY return.

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Dayal (Gen. Manager - Indirect Taxation) (3434 Points)
Replied 12 February 2008

You have to compute interest @ 13% from the date after the due date, say 5th was the due date and not paid, interest will start from 6th date. Interest to be paid along with respective GAR7 challan, the interest code is mentioned for that particular catetory and this can be obtained from cbec.gov.in. The amount is to be deposited in the bank along with your payment or separately as you wish on GAR7 Challan meant for payment of service tax.

M.Sriram Shenoy (CA Final) (814 Points)
Replied 12 February 2008

In case of delayed payment of service tax, there is mandatory payment of simple interest u/s.75 for the period which the payment is delayed. Rate of interest is 13% per annum to be calculated on service tax amount.
Every assessee has to submit half yearly return within 25 days (in Form ST-3 in triplicate and return accompanied by TR-6 / GAR-7 challans, evidencing payment of duty) from the end of half year, failing of which shall attract penalty which is as follows;
1. Delay upto 15 days - Rs.500.00
2.Beyond 15 days and upto 30 days - Rs.1,000.00
3.Delay beyond 30 days - Rs.1,000.00 plus Rs.100.00 per day of delay beyond 30 days, from 31st day, maximum Rs.2,000.00

OFFICESELVA (Service) (515 Points)
Replied 17 February 2008

Let us assume that the due date for payment is 05/01/2008 and the ST payable is Rs.1000/- but was paid only on 08/01/2008. Then the interest payable is ((10000*13%)/365)*3 (3 is no. of days of delay). In this case the interest payable will be Rs.11/- This payment has also to be paid through bank challan under the head interest.

(Guest)

9.1 The due date for payment of service tax is 5th day of the month of the following the relevant month / quarter. It is provided under section 75 of the Finance Act, 1994 that in case of delayed payments ( after due date) the assessee is required to pay simple interest at the rate prescribed. Notification No. 26/2004 dated 10.09.2004 has specified the rate of interest at 13% per annum. The table below shows the rate of interest applicable at relevant period of time. Sr.No. Period Rate of Interest 1. Till 11.05.2001 1.5% per month 2. 11.05.2001 to 11.05.2002 24% per annum 3. 11.05.2002 to 10.09.2004 15% per annum 4. From 10.09.2004 13% per annum