Dr. Sanjiv Agarwal

Revised Rate of Interest w.e.f. 1.10.2014

Vide Notification No 12/2014-ST dated 11.7.2014, rate of interest to be charged on delayed   payment of service tax has been enhanced w.e.f. 1.10.2014, based on period of delay. Thus, longer the delay period , higher would be the rate of interest payable. Accordingly, the rate of interest shall be as under :

S.No. Period of delay Rate of Simple Interest Per Annum
1 Up to six months 18 percent
2 More than six months and up to one year 18 percent for the first six months of delay; 24 percent for delay beyond six months
3 More than one year 18 percent for the first six months of delay; 24 percent for period beyond six months up to one year; 30 percent for any delay beyond one year

 To illustrate, suppose, there is a delay of 15 months in payment of service tax of Rs 1 lakh by the assessee. The impact of rate change would be as under:

If paid prior to 1.10.2014

Interest @ 18% p.a for 15 months                                                   Rs. 22500

If paid after 1.10.2014

(say due on 1 August 2013 and paid on 1 November 2014)

Period upto 30.9.2014 (14 months @ 18 % p.a.)                           Rs 21000

1 month @ 30% p.a.(as delay is > 1 year)                                      Rs. 2500

                                                                                                 ———————–

Total Interest                                                                                    Rs 23500

                                                                                               ————————

 The impact of interest would be much more if payment is delayed after October, 2014.

It may be noted that:

1)    3 percent interest rate concession allowed u/s 75 shall continue to be allowed to specified small service providers

2)    This rate structure will not be applicable to VCES cases as interest @ 18% p.a. is payable under the scheme which ends on 31 December, 2014

3)    The rate of interest is simple interest per annum

4)    New interest rate will be operational only on or after 1 October, 2014. Upto 1.10.2014, rate of interest @ 18% p.a. will continue to apply.

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4 responses to “Revised Rate of Interest in Service Tax”

  1. pooja says:

    sir i have forgot to pay service tax of april month in 2016 and paid in today date. what interest rate apply in our case to deposit in service tax. whether new interest rate applicable from 1.04.2016 or 11.may 2016 ???

  2. DRAVIN GUPTA says:

    IF PAID SERVICE TAX PAYABLE WITH 1 DAYS DELAY SO HOW I CAN CALCULATE THE INTEREST ON SERVICE TAX

  3. prasad Rao says:

    There should be one tax to be levied on people. Let calculate and die the government on how much their share is.

  4. Monica says:

    Hi when paying Service tax online i select the Service Tax type (5) including Education Cess when i get to the payment gateway these 5 appear, so do i need to reverse calculate the Service tax amount and enter individual amounts against the service tax types ? or can i just enter the Service tax amount against any field and pay it online ? Also does service tax need to be paid for Individual Invoice we raise for a client or can it be collective amount ? Thanks.

  5. PRANAV DAVE says:

    I M 15 DAYS LATE TO PAY SERVICETAX….MY ONLINE BANKING NOT ACTIVE SO I MISS DATE….NOW I CALULATE INTREST AS PER 1.5% / DAY 365 OR ONE MONTH CHARGE WILL BE APPLY ON ME….KINDLY GUIDE…

  6. ganesh prasad says:

    i have a company, i earned services,interest collected,i received donations, etc.
    how many taxes paid every month/quarterly/yearly _ i cant understand the government system taxes. TDS,INCOME TAX,WEALTH TAX,VAT,SERVICE TAX,LOCAL TAXES, HOW TO RUN MY COMPANY ? THIS CONFUSION ? CAN GIVE ANY SUGGESSTIONS PLEASE.

  7. MUTHU RANG says:

    commercial complex let out for rent . rent earned Rs. 2.5 lakhs P.M. shall i liable to pay service tax

  8. Sushil sharma says:

    can we deposit only service tax without interest, if we have deposit amt without interest, what effect as per act of service tax

  9. sudharshan says:

    If the service tax is paid less than the payable and for the same we have to pay the amount with 18% per annum i.e. (1.5%) per month or tax amountX 18% / 365 X number of days.

    • Rohan says:

      Second option, service tax payment *18%*no of days /365 if more than 6 months(180 days) then upto 180 days at 18% and beyond that 24%

  10. Anand A.P says:

    Part Payment made Interest Calculation On Service Tax Full Amount Or Outstsnding Service Tax Only (500000-300000Paid=200000/-O/S) Please Repply

  11. ANAND says:

    If You late 15 days same month due date than also 15% p.a rate applicable or 200/- per day that formula applicable for limited period.please repply

  12. Gowtham Appala says:

    Wether there is any reduction in percentage of interest if the aggregate value of services provided by service provider in the preceding financial year is less than Rs.6000000

  13. Himanshu says:

    It is to calculated on monthly basis not on day basis.

  14. NILAY BARAT says:

    Can any one provide a excel sheet with formula of the delayed interest calculation?

    • Pradip Joadder says:

      1. pl clarify the interest on delay for payment of service tax will be calculate from the due date or moth beging? for example we have to pay service every month of 6th for online payment, suppose we will pay service tax on 10th of the same month, will be paid on 4 days or 10 day?
      2. Can any one provide a excel sheet with formula of the delayed interest calculation?
      3. I have get a payment on 28th Oct’15 as. What will be the service tax interest calculation, if I pay the the same on 6th Jan.16

  15. muruganandam says:

    pl clarify the interest on delay for payment of service tax will be calculate from the due date or moth beging? for example we have to pay service every month of 6th for online payment, suppose we will pay service tax on 10th of the same month, will be paid on 4 days or 10 day?

    pl clarify

  16. Agastya Shukla says:

    If service tax is liable under RCM and payment of such service tax amount is paid after due date, can entity claim 3% deduction u/s 75?

  17. JAY MAHAKALIKA ELECTRICALS says:

    How calculate of interest in service tax after due date 58 days 06/10/2014 TO 02/12/2014

  18. Maria Silveira says:

    1 day delay payment how to calculate interest for 1 day.

  19. catarannum says:

    How can calculate interest on part of month? should part of month be considered as full month or calculation should be done daywise?

  20. Padmaja R says:

    What about our interest on refund in Income tax?

    Issuing refunds by the Income tax departments is much much delayed but rate of interest is not enhanced for delayed refunds why? How can a common Man Trust the Tax Departments?

  21. MANOJ AHUJA says:

    Charging enhanced interest on delayed payment of service tax should be immediately stopped. Out funds deducted against TDS are lying in IT coffers with barely any interest and on delayed service tax, interest is levied. Why does’nt Govt come out with an idea, that Service Tax dues can be adjusted against IT refund. IT and ST are two pockets of same govt. If one PAN has service tax payable and has IT refund, then the assessee should be given an option to take the setoff and pay/get refund for the balance.YES if there is still a libility after netting off, interest can be levied.

  22. CA. M. Lakshmanan says:

    Though interest is to be collected for delays in payment of tax, such exorbitant rates would lead to suppression only; The rates should be less than or at least equal to bank interest rates for CC Loans.

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