Service tax issue

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 January 2014 Dear Sir,

Pending payment of the period 2010 - 11 received in the current month, we haven't paid Service Tax for invoice raised in 2010 - 11 due to non receipt of the remittance. Now in Jan 2014 we received the pending payment. At the time of raising invoice, we charged 10.3 % service tax as per the applicable at that time. But now Service Tax rate is 12.36 %. Please tell me how much percentage of service tax we have to pay now.

Thanks for your reply.

MOHAMMED HUSSAIN

MOHAMMED HUSSAIN (Expert)
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30 January 2014 You will pay 10.3% only and show the same in the ST-3 return appropriately. However, if the department asks the clarification at a later date, you will submit the above details because at the time of making invoice, the rule position is payment of service tax on receipt basis only. Hence, you will pay 10.3% now and show the figures accordingly.

Querist : Anonymous

Querist : Anonymous (Querist)

31 January 2014 Dear Sir,

Thanks for your prompt reply.

One more question, do we have to pay interest on it (we raised invoice in 2010-11 but we recd money in Jan,2014) if yes then how do we calculate it ?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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24 July 2025 Got it! You’ve asked two key questions regarding service tax on delayed payments from 2010-11 received in 2014:

Which service tax rate to apply now?
The answer you got is to apply the original service tax rate of 10.3% that was applicable at the time the invoice was raised, not the current 12.36% rate. This is because service tax is payable on a receipt basis but at the rate applicable when the invoice was originally issued.

Do you have to pay interest on the delayed service tax payment? If yes, how to calculate it?

About Interest on Delayed Payment
Yes, interest is generally payable on delayed payment of service tax. The service tax department usually charges interest from the date the tax was due (i.e., when the invoice was raised or should have been paid) until the actual date of payment.

How to calculate the interest:
Interest is charged @ 18% per annum (standard rate for delayed service tax payments unless otherwise specified).

Calculate the number of days/months from the due date of service tax payment (typically the date of invoice or when payment was originally due) to the date you actually paid the service tax (in your case, Jan 2014).

Interest = (Service tax amount) × (18% per annum) × (Number of days delayed / 365)

Example:
Invoice raised: say, 1st April 2010

Payment received & tax paid: say, 15th January 2014

Service tax due (at 10.3%) on invoice amount: ₹X

Days delayed = Number of days between 1st April 2010 and 15th Jan 2014 (about 1385 days)

Interest = ₹X × 18% × (1385 / 365)

Suggestion:
Keep detailed records of invoices, dates of raising, receipt of payment, and service tax payments.

File your ST-3 return showing the original service tax amount (10.3%) on receipt basis.

Include interest on delayed payment calculated as above.

If unsure, consult a qualified tax professional or a Chartered Accountant who can confirm specifics based on your case and jurisdiction.

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