There is lot of confusion on some amendments made in service tax. I have tried to interpret the provision and to present the same in simple language.
INTEREST ON LATE PAYMENT OF SERVICE TAX:
Government has reduced the interest rate on late payment of service tax drastically from 18%/24%/30% w.e.f. 14.05.2016 to as follows:
| S. No. | Situation | Rate of Interest |
| 1 | Collection of any amount as service tax but failing to pay the amount so collected to the credit of the Central Government on or before the date on which such payment becomes due | 24% |
| 2 | Other than in situation covered under serial number 1 above | 15% |
In case the value of taxable services of assessee is less than Rs. 60 Lacs in previous year/years, then the rate of interest is further reduced by 3% and effective rate of interest will be 21% and 12% respectively.
Since service tax is on accrual basis now. POT (Point of Taxation) Rules are there and bill is to be raised accordingly as per POT. Now there are following situations:
Situation : 1:
XYZ Ltd. has raised the invoice in the month of May 2016. XYZ Ltd. has not received the payment from customer upto November 2016. The due date to deposit the service tax is 6th of June 2016. But XYZ Ltd. deposited the tax in the month of October. Now the interest need to be deposited from 6th of June to the date of payment of tax @ 15% as XYZ Ltd. has not collected the tax till October.
Situation : 2:
XYZ Ltd. Has raised the invoice in the month of May 2016. XYZ Ltd. received the payment from customer during the same month. The due date to deposit the service tax is 6th of June 2016. But XYZ Ltd. deposited the tax in the month of October. Now the interest need to be deposited from 6th of June to the date of payment @ 24% as XYZ Ltd. has collected the tax in May 2016.
Situation : 3 :
XYZ Ltd. has raised the invoice in the month of May 2016. XYZ Ltd. received the payment from customer on 31st August 2016. The due date to deposit the service tax is 6th of June 2016. But XYZ Ltd. deposited the tax in the month of October 2016. Now the interest need to be deposited from 6th of June upto 31st August @ 15% as XYZ Ltd. has not collected the tax till 31st August and from 01st September upto the date of payment @ 24% as XYZ Ltd. has collected the tax on 31st August.
Situation : 4 :
XYZ Ltd. was providing non taxable service. However, it has collected service tax on the invoice but not deposited the same with the government. Now the interest on entire amount of service tax so collected need to be deposited @ 24% as XYZ Ltd. has collected the service tax amount.
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CA Vineet Rathi Proprietor of M/s Vineet Rathi & Associates
Treasurer – Ghaziabad Branch of CIRC of ICAI
Visiting Faculty of ICAI
ACA, DISA (ICAI), LL.B., M.Com
A-370, New Panchwati Colony, Ghaziabad, U.P. – 201001
Mobile : 9717724704
E.Mail : cavineetrathi@gmail.com
Dear Vineet Ji,
Under Clause 6 of Part I of the First Schedule to the Chartered Accountants Act, 1949
(e) Publication of Books or Articles
A member is not permitted to indicate in a book or an article, published by him, the association with any firm of Chartered Accountants.
You have mentioned that you are Treasurer – Ghaziabad Branch of CIRC of ICAI That so Great Sir. But could me please clarify how you have mentioned you firm name in this article, because there is no exception available to the above rule mentioned.
Plese give the notification no.
interest rate on late deposit of service tax for the year 2017-18 ?
due date of deposit of service tax for the month April may and June 2017?
DOI 26/05/2015
Date of Deposit 10/04/2017
Service Tax 10000
Please tell me sir……..How much Interest?
Dear Sir,
Interest @ 15% or 24% is to be calculated on day basis or month wise?
Very much helpful sir. Thank you for the article. 🙂