Interest on Service Tax

[Guest]

Sir,

The rate of Interest @ 15% per year in case of delayed payment of Service Tax. Whether it mean that interest to be apid @ 1.25% per Month or irrespective of period of delay Interest @ 15% is to be paid.

For example, Liability for the Month of March is to be paid by 31st march itself. if we pay it on either 5th or 6th of April what shall be the rate of Interest to be paid?

[Himansu Sekhar]

The interest rate is calculated on yearly basis and accordingly one year is taken as 365/366 days. You can calculate the no. Of days delayed which will include the day of payment but excluding the due date of payment. It is easy to calculate now. If its paid on 6th, there is 6 days delay. Total amount multiplied by 0.15 and 6 , then divided by 365 will give your desired amount.

If it crosses 6 months or one year, the rate will be different

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Himansu

[KASTURI SETHI]

The benefit of 3 % is available under Section 75 of the Finance Act. Nicely explained by Sh. Himanshu Sha, an expert.

[Himansu Sekhar]

Thanks very much

AI Summary

Interest on Delayed Service Tax Payments: Calculated Annually with 3% Benefit Under Section 75 of Finance Act A forum participant inquired about the calculation of interest on delayed service tax payments, questioning whether the 15% annual interest rate translates to a monthly rate of 1.25% or applies uniformly regardless of the delay period. A respondent clarified that the interest is calculated annually, based on the number of days delayed, including the payment day but excluding the due date. For a six-day delay, the interest is calculated by multiplying the total amount by 0.15 and 6, then dividing by 365. Another contributor noted a 3% benefit under Section 75 of the Finance Act.