Interest on late payment of service tax

[Raj Malik]

For finalization of balance sheet for FY 2015-16, Reverse charge on manpower supply is required to be paid by us for invoice a billed on 19-11-15 amounting to ₹ 11000. Kindly tell me what should be the rate of interest on late payment of service tax which is to be paid after one year.

[DR.MARIAPPAN GOVINDARAJAN]

For the first six months - 18%; 6 months to one year - 24%; beyond one year - 30%

[KASTURI SETHI]

First of all determine point of taxation as per Rule 7 of Point Of Taxation Rules, 2011 under RCM. Thereafter, you have to compute interest in terms of Notification No.12/14-ST dated 11.7.14 which remained in force 13.5.16 (Slab wise) Thereafter, interest has to be calculated as per Notification No.13/16-ST dated 1.3.16 (Effective from 14.5.16, the date of enactment of Finance Bill, 2016.

The department always goes by the Notification which remained in force during the relevant period. (period of delay).

[YAGAY and SUN]

Slab wise Interest rate would be applicable as mentioned above. However, such interest would be paid in Cash through online GAR-7 challan.

[KASTURI SETHI]

Yes. Interest is always paid in cash.

[Ganeshan Kalyani]

The interest rate prevailed at the time of default period shall become applicable. Thanks.

[Raj Malik]

In case of reverse charge which rate should be applicable 18% or 24% for calculation of interest in the F yr 2015-16

[samiuddin ansari]

The new rate of interest came into effect from 01st Oct, 2014, by virtue of Notification NO.12/2014-S.T. Moreover, as per proviso to Section 75, three percent concession on the applicable rate of interest is also available to small service providers.Thanks.

[YAGAY and SUN]

We are amenable with your reply.

AI Summary

Interest on late service tax follows slab rates determined by point of taxation; interest must be paid in cash.
Slab-wise interest rates apply to delayed reverse-charge service tax from the point of taxation, with each slab rate governed by the notification in force during the relevant period of delay. Determination under the Point of Taxation Rules precedes interest computation. Interest on reverse-charge liabilities is payable in cash through the prescribed challan, and a statutory concession reduces the applicable interest rate for eligible small service providers.