DELAY IN PAYMANT OF SERVICE TAX:
Provisions regarding Interest on late payment of Service Tax are as follows:
If Service Tax is not paid within the stipulated time, then the same has to be paid with interest as follows:
If service tax payable as per section 68 is delayed, interest is charged at the rate not below ten per cent and not exceeding thirty-six per cent per annum. (Section 75 of Finance Act, 1994)
If service tax payable as per section 73A is withheld, Interest is charged at the rate not below ten per cent and not exceeding twenty-four per cent per annum. (Please Refer : Section 73B of Finance Act, 1994)
At Present : Simple interest @ 18% p.a. is charged for the delayed period in respect of Section 75 as well as Section 73B.
If the assessee deposits the Service Tax by cheque, the date of presentation of cheque to the bank shall be considered as date on which Service Tax has been paid subject to realization of that cheque. (Service Tax Rules, 1994. Rule 6(2A))
No Interest of Service Tax is to be charged for the period if the recovery has been stayed by any competent authority.
The rate of interest has been variable over the period of time. Earlier it was as follows:
Period prior to ----16/01/2001 ------1.50% per month or part there of
16/07/2001 to 15/08/2002 ---------24.00% per annum
16/08/2002 to 09/09/2004 ---------15.00% per annum
10.09/2004 till 31/03/2011 ---------13.00% per annum
Notifcation no. 26/2004-ST dt. 10/09/2004 Sec 75) and 8/2006 dt 19.04.2006 (Sec 73B)
01.04.2011 till date ---------------- 18.00% per anum (vide Not 15/2011 dt 1.03.2011(Sec 73B) and 14/2011 dt. 01.03.2011 Sec (75)
As Inserted vide Finance Act, 2011 w.e.f. 8-4-2011, 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, as the case may be, such rate of interest, shall be reduced by three per cent per annum.
DELAY IN REFUND
If delay in grant refund of service tax by the Depatment is for more than 3 months from the date of receipt of refund application, Interest is paid by the Government at the rate not below five per cent and not exceeding thirty per cent per annum. (Section 11BB of Central Excise Act, 1944)
At Present: Simple interest @ 6% p.a. is granted on delayed refunds