Interest on service tax delay

[SARAVANAN RENGACHARY]

Sir,

As per budget 2016, interest for delayed payment of service tax is 15%, interest for tax collected but not paid is 24%.

Query:

Due date for service tax remittance is 06th of every month. if we make the payment on 10th, there is a delay for 4 days. what is the interest rate for this delay ?. is it 15% or 24%.

Saravanan.

[KASTURI SETHI]

In Service Tax Sector, reduced rate of interest @ 15% will be effective from the date of enactment.Notification No.13/16-ST dated 1.3.16.

 

[Ganeshan Kalyani]

Sri Kasturi Sir, I agree with your views. Sir I have gone through the Finance Bill 2016 as passed by Lok Sabha wherein I found the reduced interest rate and its effective date is given for Customs and Central Excise but I couldn't not found for service tax. I think the existing slab wise rate still exists. Please share your views Sir. Thanks.

[KASTURI SETHI]

Dear Sir,

I agree with you. Old rates of interest still exist. New rates of interest will come into force from the date of enactment i.e when the President signs the Finance Bill,2016. Till date only Lok Sabha has passed and likely to be passed as it is.

Interest rate under Section 75 of the Finance Act, 1994 - Notification No. 12/2014-S.T. superseded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

AI Summary

Interest on delayed service tax payments distinguishes collected-but-unpaid from other delays; new rates effective on enactment.
Two distinct simple interest rates apply to delayed service tax: a higher rate where tax has been collected but not remitted, and a lower rate for other delayed payments. The notification supersedes the earlier notification on interest rates and takes effect only from the date the Finance Bill, 2016 is enacted, leaving the prior rates operative until that enactment; it does not affect actions completed before its supersession.