Payment of Service Tax on Rent on Immoveable Property with Interest

[PAWAN KUMAR SHARMA]

As per the recent instructions from CBEC, we have to deposit service tax on Rent on Immovable component from last year (earlier we have not paid any service tax as per the stay of Superem Court)

My Question is

1. Whether any Interest for late deposit is applicable for the same (considering the stay by Supreme Court) ?

2. What is the rate of interest ?

3. Whether interest is to be calculated on per month basis or per day basis ?

4. Suppose, we have to pay Rent for the month of July 2010 for which Bill was raised on 07th of Aug'10 and payment was done on 20th of Aug'11, then how to calculate the amount of Service Tax payable along with interest payable if we have to deposit the same in this year i.e. Aug 2011 ?

AI Summary

Interest on late service tax for rent of immovable property arises from the date tax was due, with tiered rates.
Interest on unpaid service tax for renting immovable property is payable from the date the tax ought to have been paid; it is calculated as simple interest for the delay on a per day basis. Interest rates are tiered with a concessional lower rate for small taxable turnover and a higher standard rate for others. Point of taxation rules determine whether tax is on receipt or accrual, affecting the due date; if the provider receives payment and remits tax by the applicable statutory due date (with e payment allowances), interest may not be payable. The service receiver can claim input credit if admissible.