We know that after implementation of GST w.e.f 01.07.2017, service tax no longer exist. However audit and assessment of service tax cases continues even after 01.07.2017 and in case of any demand applicable interest has to be paid.

Interest calculator for delay in payment of service tax is attached which can calculate interest in one shot for different period.

Interest is levied on the assessee when he delays the payment of service tax which is due and payable. The rate of interest u/s 75 of Finance Act 1994 has undergone a lot of changes since 01.07.1994.The summary of rate of interest is as below:

Period Rate of Interest
01.07.1994 to 15.07.2001 1.50% per month or part there of
16.07.2001 to 15.08.2002 24% per annum
16.08.2002 to 09.09.2004 15% per annum
10.09.2004 to 31.03.2011 13% per annum Notification No. 26/2004-ST dated 10.09.2004
01.04.2011 to 30.09.2014 18% per annum : Notification No. 14/2011- ST, dated 01/03/2011
15% per annum (For assessees having turnover upto Rs 60 lakhs)
01.10.2014 to 13.05.2016 * Notification No. 12/2014 dated 11.07.2014
1. 18% p.a.- Delay for first 6 months
2. 24% p.a. – Delay from 7th month to 12 month
3. 30% p.a. –  Delay for the period beyond 1 year
14.05.2016 onwards * NOTIFICATION NO.13/2016-ST, DATED 01.03.2016
24% per annum : Service Tax collected but not paid before due date
15% per annum : Service tax not collected and not paid

 * In the case of a service provider, whose value of taxable services provided in a financial year does not exceed sixty lakh rupees during any of the financial years covered by the notice or during the last preceding financial year, as the case may be, such rate of interest, shall be reduced by three per cent. per annum.] [ Refer Section 75 of Finance Act, 1994]

The summary of rate of service tax applicable for different period is also given below:

Period Rate
01.07.1994 to 13.05.2003 5.00%
14.05.2003 to 09.09.2004 8.00%
10.09.2004 to 17.04.2006 10.20% (ST+EC)
18.04.2006 to 10.05.2007 10.24% (ST+EC)
11.05.2007 to 23.02.2009 12.36% (ST+EC+SHEC)
24.02.2009 to 31.03.2012 10.30% (ST+EC+SHEC)
01.04.2012 to 31.05.2015 12.36% (ST+EC+SHEC)
01.06.2015 to 14.11.2015 14% (ST)
15.11.2015 to 31.05.2016 14.50% (ST+SBC)
01.06.2016 onwards 15.00% (ST+SBC+KKC)

Interest calculation can be illustrated with the help of below example:

Example 1) Mr X (turnover above Rs 60 lacs) has paid the service tax of Rs 1,00,000 due for the month April 2012 (due on 06.05.2012) on 10.04.2018. In such a case he need to pay interest of Rs 1,37,655 for delay of 2165 days. (Service tax collected but not paid)

Period Rate of Interest No of days Amount of Interest
01.04.2011 to 30.09.2014 18% per annum 877 43,249.32
01.10.2014 to 13.05.2016 *
– 1st 6 months 1st 6 months = 18% P.A,
7th month to 12 month = 24% P.A,
Beyond 1 year = 30% P.A
0
– 7th month to 12 month 0
– period beyond 1 year 591 48,575.34
14.05.2016 onwards * 24% per annum 697 45,830.14
2165 137,654.79

Example 2) Mr Y (turnover above Rs 60 lacs) has paid the service tax of Rs 1,00,000 due for the month April 2012 (due on 06.05.2012) on 10.04.2018. In such a case he need to pay interest of Rs 1,20,469 for delay of 2165 days. (Service tax not collected and not paid)

Period Rate of Interest No of days Amount of Interest
01.04.2011 to 30.09.2014 18% per annum 877 43,249.32
01.10.2014 to 13.05.2016 *
– 1st 6 months 1st 6 months = 18% P.A,
7th month to 12 month = 24% P.A,
Beyond 1 year = 30% P.A
0
– 7th month to 12 month 0
– period beyond 1 year 591 48,575.34
14.05.2016 onwards * 15% per annum 697 28,643.84
2165 120,468.49

Example 3) XYZ Ltd. (turnover above 60 lacs) has raised the invoice in the month of May 2016. XYZ Ltd. has not received the payment from customer upto November 2016. The amount of service tax is Rs 1,00,000. The due date to deposit the service tax is 6th of June 2016. But XYZ Ltd. deposited the tax in the month of 10.10.2016. Now the interest need to be deposited from 06.06.2016 to the date of payment of tax @ 15% as XYZ Ltd. has not collected the tax till October.

Period Rate of Interest No of days Amount of Interest
14.05.2016 onwards * 15% per annum 126 5,178.08
126 5,178.08

Example 4)  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 06.06.2016. But XYZ Ltd. deposited the tax on 10.10.2016. 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.

Period Rate of Interest No of days Amount of Interest
14.05.2016 onwards * 24% per annum 126 8,284.93
126 8,284.93

Example 5) XYZ Ltd. has raised the invoice in the month of May 2016. XYZ Ltd. received the payment from customer on 31.08.2016. The due date to deposit the service tax is 06.06.2016. But XYZ Ltd. deposited the tax in the month of 10.10.2016. Now the interest need to be deposited from 06.06.2016 upto 31.08.2016 @ 15% as XYZ Ltd. has not collected the tax till 31st August and from 01.09.2016 to 10.10.2016 @ 24% as XYZ Ltd. has collected the tax on 31st August.

Example 6)  XYZ Ltd. Has availed GTA (Goods Transport Agency) services on which service tax is payable under reverse charge. It was supposed to deposit the amount on 06.06.2016, however it paid service tax on 10.10.2016. In this case interest will be applicable @ 15% as XYZ Ltd has not collected the service tax amount (as the amount is payable under reverse charge.

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2 responses to “Service Tax Interest Calculator with examples”

  1. Srikant says:

    Interest is mandatory in nature and can’t be waived.

  2. Uma says:

    Hi Sir, Greeting for the day we received service tax notice stating to pay interest and penalty for the delay payment and delay in filing the returns on time but for a reason our company is financial drop in that period so we are not able to tax on time, but now department sent a notice asking why there is no interest and penalty is not paid ,there is any chances to waiver of interest and penalty in service tax.

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