Service Tax liability on Late payment charges

[Sanjeev Chauhan]

Respected All,

A service provider collect late payment charges from his customers, is he liable to pay service tax on such late payment charges?

Regards,

Sanjeev

[Brijesh Verma]

Dear Sanjeev

Refer rule 6 of the Service Tax (Determination of Value) Rules, 2006.

(2) Subject to the provisions contained in sub-rule (1), the value of any taxable service, as the case may be, does not include-

      (i) initial deposit made by the subscriber at the time of application for telephone connection or pager or facsimile (FAX) or telegraph or telex or for leased circuit;

      (ii)  the airfare collected by air travel agent in respect of service provided by him;

      (iii) the rail fare collected by ¹[rail travel agent] in respect of service provided by him;

      ⁶[(iv) interest on delayed payment of any consideration for the provision of services or sale of property, whether moveable or immoveable];

      ²[(v) the taxes levied by any Government on any passenger travelling by air, if shown separately on the ticket, or the invoice for such ticket, issued to the passenger.]

     ⁷[(vi) accidental damages due to unforeseen actions not relatable to the provision of service; and

      (vii) subsidies and grants disbursed by the Government, not directly affecting the value of service.]

[Sanjeev Chauhan]

Thanks a lot Sir.

 

[MANDAVILLI RAMAKRISHNA]

if and only if, you credited the interest collected account then no need to pay ST 

if you credit Misc. receipts or other income account, you have to pay ST