INTEREST CALCULATION FOR THE LATE PAYMENT OF EXCISE AND SERVICE TAX

[Mehul Pandya]

SIR,

THERE ARE 2 DATES FOR EXCISE AND SERVICE TAX PAYMENT. 5TH FOR MANNUAL CHALLAN AND 6TH FOR ONLINE PAYMENT. MY QUERY IS IN CASE WE ARE PAYING EXCISE OR SERVICE TAX ON 10TH OF THAT MONTH THEN WE HAVE TO CALCULATE INTEREST FOR 5 DAYS OR 4 DAYS ? IS THERE ANY NOTI./CIRCULAR IN SUPPORTING TO THIS ??

THANKING YOU

[YAGAY and SUN]

Dear  Mehul,

Since, it has been made mandatory to pay Duty and Taxes online and threshold limit has been reduced to Rs. 1.00 Lac, therefore, if Central Excise duty/ service tax is deposited late, then, interest would be calculated after the 6th day of the subsequent month.

You would have to pay the interest for four days only but in cash/GAR-7.

Regards

Team YAGAY & SUN

(Management & Indirect Tax Consultants)

[Arun Kumar Singh]

If you have pay the duty from manually after due date then interest will be applicable 5 days otherwise 4 days. 

AI Summary

Interest calculation for late tax payments depends on payment mode; online payments have a later cut off than manual challans.
Interest for late excise and service tax is calculated from the applicable cut off: the fifth day for manual challan payments and the sixth day for online payments; interest accrues for the days between that cut off and the actual payment date. The document notes the increased move to mandatory online payments and a reduced threshold affecting which cut off applies.