As per Section 75, simple interest at a rate not below 10% p.a. but not exceeding 36% p.a. as may be notified by the Central Government may be charged

 

Interest rate depends upon period of delay as per Notification No. 12/2014 ST dated 11.07.2014

Period of delay

Interest rate charged

Upto 6 months

18%

6 months to 1 year

First 6 months 18%

Remaining period  24%

More than 1 year

First 6 months 18%

Next 6 months  24%

Balance period 30%

* There is 3% concession if value of taxable service provided in a financial year does not exceed 60 lakh

 

 

Change in amount of interest:

Where the amount determined by the Central Excise Officer under section 73A is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal, or the Court, the interest payable thereon under this section shall be on such reduced or increased amount.

 

Period for which interest would be charged:

The interest shall be payable from the first day of the month succeeding the month in which the amount ought to have been paid till the date of payment of such amount.

 

Exam Questions

Question 16
Determine the interest payable under section 75 of Finance Act, 1994 on delayed payment of
service tax from the following particulars:

   
Service tax payable  Rs. 60,500
Due date of payment  06.10.2014
Date of payment  31.10.2015

Note: Turnover of services in the preceding financial year was ` 80 lakh.

View Answer

 

Question 17
Compute the interest payable on delayed payment of service tax by service provider in
following cases:

Name of the service provider PQR Ltd.   Mr. Manik
Service tax liability Rs. 1,23,600   Rs. 2,16,000
Delay in payment of service tax  20 days  25 days

Aggregate value of taxable services rendered in preceding financial year by PQR Ltd. was
Rs. 40,00,000 and by Mr. Manik was Rs. 62,00,000.

View Answer
  1. Service Tax
  2. Service Tax Procedures
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides GST Training in Delhi. Register now.