prpri Revised Rate of Interest in Service Tax Revised Rate of Interest in Service Tax

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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  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. 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.

  3. PRANAV DAVE says:


  4. 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.

  5. 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

  6. 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.

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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?

  12. 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?

  13. 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.

  14. 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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