POT RULES - REVERSE CHARGE

[SARVESH BANSAL]

Dear Sir

We had received bill from transporter pertains to Dec 15 & Jan 16 and their payment is made on April 16. We are paying Service tax on GTA under reverse charge.

As we had liable to pay interest , in case of reverse charge point of taxation is date of payment. Further, in case payment is not made within a period of three months the point of taxation shall be the date immediately following period of three months.

My question is that Whether bill pertains to Jan 16 (date of Bill 15 Jan 16) is liable for interest ?

How to calculate interest ? and What is the rate of interest in this case whether is it 15% or 18%

[KASTURI SETHI]

What is the exact date of payment in April, 16 ? What is the date of bill of Dec.,15 ?

[SARVESH BANSAL]

Bill Date - 07.12.2015 & payment date - 21.04.2016

[Ganeshan Kalyani]

Interest rate is 18%.

[KASTURI SETHI]

SH.SARVESH BANSAL JI,

Whether rate of interest is at the rat of 15% or 18 % ? We have to calculate a period of three months (calendar year-wise and month-wise)

First instance Period three months

Date of bill 15.1.16 date of payment of ST 16.4.16 Delay : Jan.,16 = 17 days

Feb.,16 = 29 days

Mar.,16 = 31

April, 16 =15

Total =92 days

Allowed =91 days

Delay = 1 day

Since delay is in April,16 Rate of Interest @ 15%

Second Instance

Date of bill : 7.12.15 Date of payment 21.4.16

Details of period taken in stead of three months

Dec.,15 = 25 days

Jan.,16 = 31

Feb.,16 = 29

Mar.,16 = 31

April,16 = 20

Total= 136 days allowed 91 days = Delay by 45 days Rate of Interest @18% For 25 days in March,16

@ 15% 20 days April, 16

[Ganeshan Kalyani]

Sir regarding rate of Interest I will have to check the notification. Thanks.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Sir, I agree with you regarding the rate of interest @ 18% for the period of delay prior to 1.4.16.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

You are right Sir. In Service Tax rate of interest has been reduced to 15% vide Notification No.13/16-ST dated 1.3.16 but it shall come into force from the date of enactment. However, in Central Excise rate of interest @ 15% is effective from 1.4.16.

Sh.Sarvesh Bansal, querist is requested to follow the rate of interest @18% as advised by Sh.Ganeshan Kalyani, Sir.

Interest rate under Section 75 of the Finance Act, 1994 - Notification No. 12/2014-S.T. superseded

In exercise of the powers conferred by section 75 of the Finance Act, 1994 (32 of 1994) and in supersession of the notification No. 12/2014-Service Tax, dated the 11th July, 2014, published in the Gazette of India, Extraordinary, vide number G.S.R. 482(E), dated the 11th July, 2014, except as respects things done or omitted to be done before such supersession, the Central Government hereby, for delayed payment of any amount as service tax in the situation mentioned in column (2) of the Table below, fixes the rate of simple interest per annum mentioned in the corresponding entry in the column (3) of the said Table :-

Serial Number	Situation	Rate of simple interest
(1)	(2)	(3)
1.	Collection of any amount as service tax but failing to pay the amount so collected to the credit of the Central Government on or before the date on which such payment becomes due.	24 per cent.
2.	Other than in situations covered under serial number 1 above.	15 per cent.

2. This notification shall come into force on the day the Finance Bill, 2016 receives the assent of the President.

[Notification No. 13/2016-S.T., dated 1-3-2016]

Inconvenience caused is regretted.

AI Summary

Interest on reverse charge liabilities requires applying varying interest rates depending on delay and notification effective date. Liability for service tax under reverse charge is determined by the point of taxation: payment date is the point, or if payment exceeds three months the point is the day after that period. Delay is calculated from bill date to payment date; days beyond the three month allowance attract interest. Notification No.13/2016 S.T. prescribes separate interest rates for collected-but-unpaid amounts and for other delays and comes into force on enactment, requiring apportionment of delay periods when rates change.