Interest on delayed remittance of service tax

Dear Mukunda 

Delay in payment of ST including a part thereof attract simple interest in terms of section 75 of the Act. The rate of interest is as prescribed form time to time in accordance with this section. At present the rate of interest is 13% per annum ( notification No.26/2004/ST dt. 10.9.2004) Further failure to pay st also attracts a penalty under section 76 of the Act which shall not be less than Rs.200 for every day during which such failure continues of at the rate of 2% such tax per month Which ever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of ST However such penalty would not exceed the st payable.

It is 13% p. a. only from the due date till the date of payment of service tax.

Agree With Sankalp and Aditya Sir, further the rate of interest calculated on defaulted days only, which means it is calculated on day basis instead of monthly like in TDS and Income Tax and  the Penalty can be avoided if the Service Tax deposit with interest before receiving show case notice from department.

I agree with Mr Ashish and  the calculation is --  Amount to be payable *13%* defaulted days / 365