07 March 2015
Hi, can any one tell me whether interest charged on delayed payments for flat will be chargeable to service tax? Interest is for late payment of installment on completion of slab
08 March 2015
No. Charging of interest for delay in payment cannot be subjected to service tax in my opinion since it is transaction in money and excluded from levy of service tax by way of inclusion in negative list.
09 March 2015
Rule 6 of the Service tax (Determination of Value) Rules 2006 may be referred in this relation.
Rule 6(2)(iv) of the Service tax (Determination of Value) Rules 2006 provides the following exclusion from the value of service :
Subject to the provisions contained in sub-rule (1), the value of any taxable service, as the case may be, does not include–
(i)….
(ii)…..
(iii)…...
(iv) interest on delayed payment of any consideration for the provision of services or sale of property, whether movable or immovable;
Further, an extract from the educational guide on service tax - para 4.14.10 is reproduced below:
Interest for delayed payment of any consideration for the sale of goods or provision of service has been specifically excluded from value by rule 6 of valuation rules. Thus ordinarily any interest charged for delayed payment of consideration would have been outside the gambit of service tax.
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