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Interest on service tax

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Querist : Anonymous

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Querist : Anonymous (Querist)
25 June 2015 Sir i have a query

Suppose in the month of jan my service tax liability is rs 50000 and i didnot remit the same within due date.so for example an interset of 5000 was added and total became 55000 for next month.If i pay only 50,000 then for the remaining 5000(interest) th e government will chrage again interest??

26 June 2015 No. Interest is not applicable on interest part.


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.
# Up to six months - 18% p.a.
# Beyond six months to one year - 18% p.a. for the first six months of delay; 24% p.a. for delay beyond six months.
# Beyond one year - 18% p.a. for the first six months of delay; 24% p.a. for period beyond six months up to one year; 30% p.a. for any delay beyond one year.

If turnover during preceding FY did no exceed Rs 60 Lacs then there will be a concession of 3% and interest rate will be reduced from 18% p.a. to 15% p.a.

26 June 2015 Remember you need to calculate interest on days basis for delay period which is from the due date of payment till the date of actual payment. Please check out the "Service Tax Late Payment Interest Calculator wef 01/10/2014" from link given below:

https://www.caclubindia.com/share_files/service-tax-late-payment-interest-calculator-wef-01-10-2014-64447.asp#.VLPlniuUfUs




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Querist : Anonymous

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Querist : Anonymous (Querist)
26 June 2015 yeah sir i agree with that.But am asking u about the interest portion.What happens if we ignore interest and pay only the service tax amount.Will the department charges any interest or penalty for non payment/late payment of interest on service tax??

In my example 50,000 is basic amount and 5000 is interst portion,I have paid 50,000 but i didnt pay 5000.Will govrnment charges any interest on that 5000 portion??

27 June 2015 FAILURE TO PAY TAX [Section 76]

Any person liable to pay service tax who fails to pay such tax, shall pay in addition to such tax and interest, a penalty being higher of Rs.100 per day or 1% of such tax per month, for the period of due date till the date of payment.

However, the total amount of penalty shall not exceed 50% of service tax payable.

In R.B.Bahutule v. CCE [(2007) 8 STT 286 (MUM. - CESTAT)], it was held that failure to pay service tax includes failure to pay service tax for any period of time beyond the due date. Hence penalty could be levied in case of delayed payment to taxes also.


No interest on interest.

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Querist : Anonymous

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Querist : Anonymous (Querist)
27 June 2015 Thank you sir.Can i know under which section it say like no interest on interest.

27 June 2015 I could not find any section under which Interest on Interest is mentioned and therefore, I think there will be no interest on interest.



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