Amendment of service tax- interest rate

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Darshika Laddha asked over 3 years ago

if invoice is issued before 1.10.2014 and service tax is not paid on the due date, how will interest be calculated??

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4 Answers
Open uri20170510 32134 1c996lj?1494421732 Anil answered almost 3 years ago

if invoice is issued before or prior to 01.10.2014 and service tax is not paid on the due date then the interest will be calculated @18%p.a. and a deduction of 3% will be allowed who are having their receipts less than or equal to 60lakhs rupees i.e. 15% rate will be applicable in this case. amendment have been made in the calculation of interest rate wef 1.10.2014 and a slab system has been introduced in which three slabs have been made by the department. These are: delay upto 6 months - 18% delay for next 6 months - 24% delay beyond 1 year - 30% however, in the above slab system again a deduction of 3% will be allowed to the small service providers in the above slabs provided they are satisfying the above limit of 60%. with all this, there is a major aspect that is to be considered and here it is important to mention, Moreover, I have to tell you about this because it is important for calculation purpose. The issue is that the period of delay before 01.10.2014 i.e. amendment date is also to be considered for checking the interest rate according to slab . friend, now suppose bill is issued prior to 01.10.2014 and upto 01.10.2014 the period of delay is 7 months then in this case the rate of interest will be 18% for period of delay upto 01.10.2014 as per old provision but for the delay which is after 01.10.2014 the rate of interest will be 24% instead of fresh 18%. similarly suppose the period of delay upto 01.10.2014 is 12 months or more then rate of interest for that period is 18%pa as per old provision but for the delay after that date, rate of interest will be 30% instead of fresh 18% from 01.10.2014.

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Open uri20170510 32134 asj5eh?1494421651 anubhav answered over 3 years ago

Dear Friend, if invoice is issued before or prior to 01.10.2014 and service tax is not paid on the due date then the interest will be calculated @18%p.a. and a deduction of 3% will be allowed who are having their receipts less than or equal to 60lakhs rupees i.e. 15% rate will be applicable in this case. amendment have been made in the calculation of interest rate wef 1.10.2014 and a slab system has been introduced in which three slabs have been made by the department. These are: delay upto 6 months - 18% delay for next 6 months - 24% delay beyond 1 year - 30% however, in the above slab system again a deduction of 3% will be allowed to the small service providers in the above slabs provided they are satisfying the above limit of 60%. with all this, there is a major aspect that is to be considered and here it is important to mention, Moreover, I have to tell you about this because it is important for calculation purpose. The issue is that the period of delay before 01.10.2014 i.e. amendment date is also to be considered for checking the interest rate according to slab . friend, now suppose bill is issued prior to 01.10.2014 and upto 01.10.2014 the period of delay is 7 months then in this case the rate of interest will be 18% for period of delay upto 01.10.2014 as per old provision but for the delay which is after 01.10.2014 the rate of interest will be 24% instead of fresh 18%. similarly suppose the period of delay upto 01.10.2014 is 12 months or more then rate of interest for that period is 18%pa as per old provision but for the delay after that date, rate of interest will be 30% instead of fresh 18% from 01.10.2014. After amendment in interest rate, calculation has not got complexed as many students are saying this but the main reason which has made it complex is the ignorance of one important aspect i.e. period of delay prior to 01.10.2014.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 rajesh answered over 3 years ago

If invoice is issued prior to 1.10,2014 then interest @ 18℅ p.a will be applicable. And 3% concession will be allowed to specified small service provide. note : amendment made as on 1.7.2014 in rate of interest which is applicable from 1.10.2014, i.e. this rate of interest will be applicable to only invoices issued on or after 1.10.2014.. Amended rate of interest applicable from 1.10.2014 S.No. Period of delay Rate of Simple Interest Per Annum 1 Up to six months 18 percent 2 More than six months and up to one year 18 percent for the first six months of delay; 24 percent for delay beyond six months 3 More than one year 18 percent for the first six months of delay; 24 percent for period beyond six months up to one year; 30 percent for any delay beyond one year

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Kiran Kale answered over 3 years ago

As per Notification No. 12/2014 - Service Tax, Central Government fixes variable rates of interest rates on delayed payment of Service Tax. The notification shall come into force on 1st day of October, 2014. The ambiguity regarding Interest rate applicability for service tax which have become due before October 2014 could be resolved by referring D.O.F. No.334/15/2014-TRU. I would reiterate the necessary portion of it as follows: 1.Extent of Delay upto 6 months : Simple Interest Rate Per Annum 18% 2.Extent of Delay more than 6 months however upto 1 year : 18% Per Annum for first six months, and 24% Per Annum for the period of delay beyond six months 3.Extent of Delay more than 1 year : 18% Per Annum for first six months, 24% Per Annum for second six months, and 30% Per Annum for the period of delay beyond one year As an illustration, assume a case where service tax became due, say, on the 6th of July, 2012 and the assessee pays the dues on 6th of December, 2014. In such a case, the interest to be charged would be as below: (i) 18% simple interest upto September, 30th, 2014. (ii) For the period from 1st October, 2014 to 6th December, 2014, the rate of interest will be 30% since the period of delay is beyond one year. As specified in the proviso to section 75, three per cent concession on the applicable rate of interest will continue to be available to the small service providers.

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