TaxTMI 
TaxTMI 
Sir,
As the finance bill, 2016 is enacted on 14.05.2016, new rate of interest is also get effected.
how new rate of interest will be apply in for earlier transaction ??
Is there any provision in this regard...?
How to apply new Service Tax Interest Rate ??
19 May 2016 
23 Replies 
8594 Views Asked by
Service tax interest rate change applies prospectively from enactment; interest computed by period when tax was due.
Debate centers on whether the revised interest rate applies to earlier service tax demands when interest is paid after enactment. Notification No.13/2016 fixes the new rate and states it comes into force on assent of the Finance Bill; absent express retrospective language, the notification is applied prospectively. Consequently interest is to be computed by reference to the rate prevailing for each period when the tax was due, potentially segmenting liability across rate periods, although some judicial pronouncements were cited advocating application of the rate at time of payment. (AI Summary)
Debate centers on whether the revised interest rate applies to earlier service tax demands when interest is paid after enactment. Notification No.13/2016 fixes the new rate and states it comes into force on assent of the Finance Bill; absent express retrospective language, the notification is applied prospectively. Consequently interest is to be computed by reference to the rate prevailing for each period when the tax was due, potentially segmenting liability across rate periods, although some judicial pronouncements were cited advocating application of the rate at time of payment. (AI Summary)