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Service tax interest

CA Rajdeepsinh Kanchava (Senior accountant at KPO) (736 Points)

02 January 2015

Hello There,

Greetings of the day to all CCI memers.

I am confused abount applicability of notification No.12/ST, dated 11.07.2014 wherein it has been stated that interest rates from 01.10.2014 shall be as prescribed in the said notification.But if we are having service tax for the period prior to 01.10.2014 which we are paying after 01.10.2014, then whether we are to consinder revised interest rates or we are required to calculate service tax as per old interest rates.

Please reply fast...

Thanks in advance.

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2 Replies

Deepak Gupta (CA Student) (15922 Points)
Replied 02 January 2015

18% or 15% (as the case may be) simple interest upto 30.09.2014.
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Variable interest rates will apply on/after 01.10.2014.
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Illustration:
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Assume a case where service tax became due, say, on the 06.07.2012 and the assessee pays the dues on 06.12.2014. In such a case, the interest to be charged would be as below:
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(i) 18% simple interest upto 30.09.2014.
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(ii) For the period from 01.10.2014 to 06.12.2014, the rate of interest will be 30% since the period of delay is beyond one year.
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[As specified in the proviso to section 75, 3% concession on the applicable rate of interest will continue to be available to the small service providers.]
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- Letter D.O.F. No. 334/15/2014-TRU, dated 10.07.2014 (Refer Page No. 6): Click Here