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Interest on interest on service tax

Parthasarathi Sarkar (Accountant) (28 Points)

21 August 2014

Suppose due date for payment of service tax was 05/02/2014 but it was paid on 18/06/2014 without paying interest for the delay period of 133 days. If I pay the interest today that is on 21/08/2014 should the delay period be calculated from 05/02/2014 till today or is there any provision of paying interest on late payment of interest and if it is under which section of the act? I mean is it possible to pay interest for 133 days and interest on that interest for the delay period to pay interest?

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3 Replies

Anubhav Dubey (Student CS) (33 Points)
Replied 21 August 2014

Originally posted by : Parthasarathi Sarkar
	Suppose due date for payment of service tax was 05/02/2014 but it was paid on 18/06/2014 without paying interest for the delay period of 133 days. If I pay the interest today that is on 21/08/2014 should the delay period be calculated from 05/02/2014 till today or is there any provision of paying interest on late payment of interest and if it is under which section of the act? I mean is it possible to pay interest for 133 days and interest on that interest for the delay period to pay interest?

Hiii,

You have to pay interest on late payment of Service tax @ 1.5% P.M. for the period of 133 days, and for delay payment of interest you have to pat interest on interest amount @ 1% PM.

Thanks

Venkatanarayana GM (Partner associate at Hiregange & Associates) (1279 Points)
Replied 22 August 2014

Dear Mr. Parthasarathi,

Interest is applicable only for the period of delay i.e in your case 133/132 days (the due date was supposed to be 6th of Feb if your making online payment).

There is no provision in the law, to levy interest on interest.

Thanks.

Venkat