CA Umesh Sharma
Krishna (Fictional Character): Arjuna, just festival of “Dasara” has been celebrated. In this cruel Ravana was burnt. The rate of interest charged by service tax department from 1st October 2014 is like Ravana. Further financial budget there are various changes in service tax provisions.
Arjuna: Krishna, What are the changes in rate of interest of service tax?
Krishna: Arjuna, if any tax is paid after due date then interest is required to be paid. In various acts rate of interest is mentioned. In service tax before 1st October 2014 if service tax was paid late then interest @18% p.a. was required to be paid. However from 1st October 2014 rate of interest has been increased by the department. Depending upon the period of delay rate of interest has been increased. If there is delay in paying service tax of 6 months then rate of interest is 18% p.a., if delay is between 6 months to 1 year then rate of interest is 24% p.a. and if delay is more than a year then rate of interest @ 30% will be levied. For e.g. if service tax is due for payment on 5th October 2014 and it is paid on 5th November 2015 then for delay of 13 months interest will have to be paid @18% for first six months then @24% for next six months and @30% for one month will be required to be paid.
Arjuna: Krishna, It means government is collecting heavy interest from the taxpayers. What are the other changes in service tax provisions?
Krishna: The changes in service tax provisions are as under:
1. In the provisions of Reverse Charges Mechanism the due date for payment is when the payment for services received is made or the date after three months from the invoice date is considered. Previous it was six months.
2. All service tax payers are compulsorily required to make e payment from 1st October 2014.
3. From 1st September the service tax payer can avail credit of service tax in six months only.
4. For filing appeal in service tax 7.5% or 10% of the appeal amount is required to be paid before filing appeal.
Arjuna: Krishna, What one should learn from the increase in rate of interest of service tax?
Krishna: Arjuna, taxpayers are required to adhere to rules of government. If government will levy harsh rate of interest in one act then what taxpayer will earn? Government should bring provisions after considering side of taxpayer. Further taxpayer should make proper planning for payment of taxes, so that interest will not be required to be paid. In life if some things are delayed then they troubles. For e.g. medication, government taxes. Nowonwards service tax will have to be paid regularly.