Interest on service tax

Queries 3196 views 9 replies

E.KALAIKOVAN

Sr. Accounts Manager

352 Points Joined October 2009

Service Tax payable for the month of April 2011 Rs 17.00 lakhs. Due date of payment is 06/05/2011. Serivce Tax is paid Rs 20.00 (Excess) in 24/05/2011. The excess paid Rs 3.00 is adjusted in the next month. But the assesse forget to pay interest for the period 06/05/2011 to 24/05/2011.

Now the Service Tax person is asking to pay interest for the period 06/05/2011 to Till date. But the assessee say he can pay interest only for the delayed period ie 06/05/2011 to 24/05/2011.

Like the above, three payments are there. If interest is calculated as per the Service tax person advice, interest is coming more than 10.00 lakhs.

Please advice

Replies (9)

satish kumar voleti

A.C.A. (ICWAI)

1686 Points Joined May 2008

Service TAX due 17.00 Lakhs

Due Date 06/05/2011

actual date of payment 24/05/2011

interest on service tax is payable from 07/05/2011 to 24/05/2011.. i.e. form 18 days

so interest will be 1700000*15%*18/365 days....= 12575/--.

R K cigiri

Fin. Exe.

43 Points Joined December 2012

As per Secn. 75 of FA '94, interest is payable "for the period by which such crediting of tax or any part thereof is delayed". As tax has been paid on 24.05.2011, interest is payable upto that point of time and not till date.

Mihir Doshi

B.Com CA CS LLB

2187 Points Joined July 2008

Agree with Expert. Also in case of Service Tax, Calculation is date wise / day wise and not month wise as in Income Tax.

deepali agarwal

Company Secretary

1289 Points Joined September 2010

It doesnt matter that u deposited more tax since u had claimed for refund u r liable to pay tax on the delayed periiod daywise...

vipul

M.Com

31 Points Joined October 2012

Dear All Professionals,

You all are right as per Rules that the Interest is Payable only for the Delay Period. i.e. for the period from 7.5.11 to 24.5.11 only.

But, if I am the Service Tax Auditor, I would ask for Interest on Interest as the interest is not paid at that time.

If the Interest Amount for 18 day is Rs. 12575/-paid today, I will ask for Interest on Rs. 12575/-, i.e. Rs. 3395/- aprox. (from 24.5.11 to 25.12.12).

This is my personal view, pls. correct me, if I am wrong wherever.

Regards

Vipul

Manoj Agarwal

Service Tax Consultant Rourkela Service

3456 Points Joined March 2012

Originally posted by : vipul

Dear All Professionals,

You all are right as per Rules that the Interest is Payable only for the Delay Period. i.e. for the period from 7.5.11 to 24.5.11 only.

But, if I am the Service Tax Auditor, I would ask for Interest on Interest as the interest is not paid at that time.

If the Interest Amount for 18 day is Rs. 12575/-paid today, I will ask for Interest on Rs. 12575/-, i.e. Rs. 3395/- aprox. (from 24.5.11 to 25.12.12).

This is my personal view, pls. correct me, if I am wrong wherever."

Dear Vipul,

There is no provision in service tax law to charge Interest on Interest. As an auditor, one needs to mention the provision under which a demand is raised.

All the Experts have unanimously given there opinion and I agree with them.

chandan kaushal

Professional

27 Points Joined January 2009

yes interest will be paid only for delayed period. but rate of interest will be 18% in stead of 15% as mentioned above.

Manoj Agarwal

Service Tax Consultant Rourkela Service

3456 Points Joined March 2012

Yes, Mr. Chandan is correct that Rate shall be 18% instead of 15% as abvove. W.E.F 01-04-2011, the rate of interest u/s 75 of the Act has been revised from 13% p.a. to 18% p.a. And the benefit of reduced rate of 15% is available only when the aggregate taxable service is below Rs. 60 Lacs, which is not the case above.