Penalty calculation
This query is : Resolved
05 January 2014
from which date we have to calculate interest & penalty in excise,service taxes
RAMESH KUMAR VERMA
(Expert)
06 January 2014
The rate of interest is 13% per annum as on date for delayed payment of service tax.
However the interest rate was different for earlier periods.
From 16.8.2002 to 09.09.2004 it was 15% and before that 24% from 16.7.2001. From 10.09.2004, it remains at 13%.
So if your calculating interest for a period before 10.09.2004, you have to apply the prescribed rate for that period.
The interest prescribed at 13% rate is for one full year and if the delay is less than one year or for part of a year, then the number of days has to be calculated for arriving at the interest payable.
To calculate the interest you should know three things.
*****************************************
The first is the amount of service tax not paid. The second is the rate of interest payable for the particular period. and the third one is the number of days delayed.
To calculate the number of days delayed, you should know the date on which the service tax should have been paid and the actual date of payment of the service tax.
Let us take an example :-
======================
A an individual paid the tax of Rs.10,000/- pertaining to the month of March 2009 on 6 th June.what is his interest liability.
As I already said we should know three things to work out the tax liability. The amount paid late is Rs.10,000. The rate of interest is 13%.
To calculate number of days delayed we should know the date on which service tax need to be paid and the date of payment.
The date of payment in this case is 6th June. The date on which tax is payable is March 31. Therefore the number of days between March 31 to June 6 should be calculated.
For calculating the number of days the date on which the tax is to be paid is not to be included but the date on which tax is paid is to be included.
Therefore the number of days delayed comes to 67 days. ( April 30 days +May 31 days + June 6 days). Now we have all the details and we only need to apply this to the following formula.
Interest payable = Amount not paid X( No.f of days delayed/365) X 0.13.
Interest payable = 10,000 X (67/365) X 0.13 =Rs.239/-
for more info:
https://www.caclubindia.com/share_files/service-tax-interest-penalty-calculator-53310.asp#.Usouo_vHrIU
However the interest rate was different for earlier periods.
From 16.8.2002 to 09.09.2004 it was 15% and before that 24% from 16.7.2001. From 10.09.2004, it remains at 13%.
So if your calculating interest for a period before 10.09.2004, you have to apply the prescribed rate for that period.
The interest prescribed at 13% rate is for one full year and if the delay is less than one year or for part of a year, then the number of days has to be calculated for arriving at the interest payable.
To calculate the interest you should know three things.
*****************************************
The first is the amount of service tax not paid. The second is the rate of interest payable for the particular period. and the third one is the number of days delayed.
To calculate the number of days delayed, you should know the date on which the service tax should have been paid and the actual date of payment of the service tax.
Let us take an example :-
======================
A an individual paid the tax of Rs.10,000/- pertaining to the month of March 2009 on 6 th June.what is his interest liability.
As I already said we should know three things to work out the tax liability. The amount paid late is Rs.10,000. The rate of interest is 13%.
To calculate number of days delayed we should know the date on which service tax need to be paid and the date of payment.
The date of payment in this case is 6th June. The date on which tax is payable is March 31. Therefore the number of days between March 31 to June 6 should be calculated.
For calculating the number of days the date on which the tax is to be paid is not to be included but the date on which tax is paid is to be included.
Therefore the number of days delayed comes to 67 days. ( April 30 days +May 31 days + June 6 days). Now we have all the details and we only need to apply this to the following formula.
Interest payable = Amount not paid X( No.f of days delayed/365) X 0.13.
Interest payable = 10,000 X (67/365) X 0.13 =Rs.239/-
for more info:
https://www.caclubindia.com/share_files/service-tax-interest-penalty-calculator-53310.asp#.Usouo_vHrIU
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