New rates of interest

[vasudevan unnikrishnan]

Hope all of you must have seen the notification no.13/2016 ST as per which the rates have been fixed as 15 and 24% from the date of enactment of FA,2016.

Has anybody examined the exact scope of words--

" except as respects things done or omitted to be done before such supersession"

Does it have any implication that new rates will apply from the due date of payment of taxes in all cases?

 

unnikrishnan v,cochin

[Rajagopalan Ranganathan]

Sir,

My view is that the new interest rate is applicable only in the following situation:-

Suppose the Finance Bill receives the assent of President of India on 1.6.2016.
If service tax payable on 5th or 6th of June 2016 is paid belatedly in that case only the revised interest rate will be applicable

[Ganeshan Kalyani]

The applicability of new rate of interest is prospective and applicable from the due date of tax till the payment is made. Thanks.

[KASTURI SETHI]

Sh.Vasudevan Unnikrishnan Ji,

I agree with both experts, namely, Sh. Rajagopalan Ranganathan and Sh. Ganeshan Kalyani, Sirs. I further add that reduced rate of interest is applicable to "Future Offenders for delay in payment."

Just for additional information, it is pertinent to mention that when rate of interest is increased by the Govt., normally the Govt. officers charge the increased rate of interest retrospectively. For example ; if the rate of interest is increased from 1.3.2016, it is practice that the department charges enhanced rate of interest for the delayed occurred in the past period i.e. November, 15 and December, 15.

Thus by the wordings, "except as ------------" no benefit for the offence committed in the past.

[vasudevan unnikrishnan]

Thanks for expert comments.

After the posting of querry only, I noticed that similar clause was there in the 2014 notification when varied rates 18,24 and 30 was introduced form 1/10/2014.

On the same anology, the reduced rates @15/12 etc will be applicable to the tax dues outsanding as on the date of enactment/President's assent to Finance Bill,2016.

Thanks again to all.

[KASTURI SETHI]

Sh.Vasudevan Unnikrishnan Ji,

Sir, Thanks for confirmation of the views and enrichment of my knowledge.

[Ganeshan Kalyani]

Sri Kasturi Sir, such confirmation from the querist gives us a acknowledgement that the query has got resolved in complete sense. Otherwise querist do not bother to confirm in most of the cases. Thanks.

[vasudevan unnikrishnan]

Thanks Mr.Ganeshan Kalyani ji,

I had clearly concluded the answer to my querry based on inputs from experts and the wordings of earlier notification.

Once again thanking all Experts who joined the discussion with valid inputs.Special thanks to Mr Kasthuri Sethiji.

Good day.

Unnikrishnan.

[KASTURI SETHI]

Sh. Vasudevan Unnikrishnan Ji,

Sir, I am indebted to you for your complements. These are a source of inspiration as well as moral boosting indeed.

Have a nice day.

With regards,

K.L.SETHI

AI Summary

Interest rate change applies prospectively from the tax due date until payment, not retrospectively for past defaults.
The discussion concludes that revised interest rates on service tax under the Finance Act operate prospectively from the date of enactment/assent and apply from each tax due date until payment is made; reduced rates affect outstanding dues going forward and future delays but do not retroactively reduce interest already accrued for delays that occurred before supersession, although administrative practice sometimes treats rate increases retrospectively.