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Interest on interest - service tax

Service Tax (Legacy) 536 views 2 replies

Dear Colleagues,

A company has made late payment of service tax amount but has not paid interest on the same.

How would the interest be calculated??

Details:

Invoice Date     Service Tax Due Date       ST Payment Date    ST Amount (Rs.)

03rd July, 12     05th August, 12                  05th Sept, 12           30529

As of today, interest amount is not paid. What should be the interest amount to be paid? Is 390Rs. correct??

Kindly reply at earliest nad provide link if possible to support your reply.

Thanks in Advance.

Replies (2)

When we pay Service tax, S T Challan doesnt differentiate in Tax and Interest figure as in case of TDs payment. So whatever is the interest amount and service tax amount is all total which we require to pay on the payment day and if any balance remains will be treated as unpaid liability and interest has to be paid on in and there is nothing like interest on interest so it would be safer if we pay interest at the given rate because paying the interest on interest looks better than not paying interest at all and postponing the interest amount with the intent that interest can not be charged on interest.

 

As in your case your Service tax  liability due on 5th aug is Rs 30529/- and you are paying it on 5th Sept so interest for 31 days would be 467 @ 18% p a calculated day basis. (due date is 6th for e-payment) so the total would be 30966/- and you paid Rs 30529 on 5th sept so the balance payable would be 467 plus interest till the date of payment.

I think it should be Rs. 466 (i.e. 30,529X31days*X18%/365)

 

*31 days=== {6-sep-12 --5aug-12}+1


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