Dear Madam\Sir, If service tax payable on 07/01/2013 is Rs. 2,00,000/-, service tax paid on 07/01/2015 like to know the following on interest computation 1) Scenario-1 Interest rate on service tax from 07/01/2013 to 30/09/2014 @ 18% per year and from 01/10/2014 to 07/01/2015 @ 30% per year 2) Scenario-2 Interest rate on service tax from 07/01/2013 to 06/07/2013 at 18% per year 07/07/2013 to 06/01/2014 at 24% per year 07/01/2014 to 07/01/2015 at 30% per year Please can you clarify which method of interest computation is correct.
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Interest rate on service tax
Replies (2)
Scenario-2 seems to be correct.
Your observation in the first instance is correct.
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Interest should be charged at 18% simple interest upto 30.09.2014.
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Then, for the period from 01.10.2014 to 07.01.2015, the rate of interest will be 30% since the period of delay is beyond one year.
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- Clarified by Tax Research Unit Letter D.O.F. No. 334/15/2014-TRU, dated 10.07.2014. Refer to Page No. 6 of this -> link
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Further, if the preceding F.Y. turnover is <= 60lakh, then interest rate would be 15%, applicable for small service providers.
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