REVISED RATE OF INTEREST W.E.F. 1.10.2014
Vide Notification No 12/2014-ST dated 11.7.2014, rate of interest to be charged on delayed in payment of service tax has been enhanced w.e.f. 1.10.2014, based on period of delay. Thus, longer the delay period, higher would be the rate of interest payable. Accordingly, the rate of interest shall be as under
PERIOD OF DELAY RATE OF SIMPLE INTEREST PER Annum
- 0-6 Months:18%
- 6 Month-1 Year:18 % for the first 6 months of delay; 24 % for delay beyond 6 months
- More than 1 Year:18% for 0-6 months of delay;24% for 6 months-1 year;30% for delay beyond 1 year
To illustrate, suppose, there is a delay of 15 months in payment of service tax of Rs 1 lakh by the assessee. The impact of rate change would be as under
- If paid prior to 1.10.2014
Interest:18% p.a for 15 months :Rs. 22500
- If paid after 1.10.2014
(say due on 1 August 2013 and paid on 1 November 2014)
Period upto 30.9.2014 (14 months @ 18 % p.a.) :Rs 21000
1 month:30% p.a.(as delay is > 1 year): Rs. 2500
Total Interest :Rs 23500
THE IMPACT OF INTEREST WOULD BE MUCH MORE IF PAYMENT IS DELAYED AFTER OCTOBER,2014.
It may be noted that, 3 percent interest rate concession allowed u/s 75 shall continue to be allowed to specified small service providers.
Meaning of Specified small service providers – In the case of a service provider, whose value of taxable services provided in a financial year does not exceed sixty lakh rupees during any of the financial years covered by the notice or during the last preceding financial year.
The rate of interest is simple interest per annum.
New interest rate will be operational only on or after 1 October, 2014. Upto 1.10.2014, rate of interest @ 18% p.a. will continue to apply.