News Update

 
Interest-ing change in interest of assessee

FEBRUARY 29, 2016

By CA Pratik Shah and CMA Khushbu Trivedi

THE Union Budget 2016 introduced several amendments in Service Tax including changes in interest rates.

At present, interest in case of delayed payment by the assesse is payable as under:

 

 

Period

Rate per annum as per period of delay

w.e.f. 1 October 2014

•  Delay upto 6 months- 18% p.a.

•  Delay for more than 6 months and upto one year- 18% p.a. for the first 6 months of delay plus 24% p.a. for delay beyond 6 months

•  Delay for more than a year- 18% p.a. for the first 6 months of delay plus 24% p.a. for delay beyond 6 months upto 1 year plus 30% p.a. for any delay beyond one year

A reduction of 3% is available in aforesaid rates for assesses with less than INR 60 lacs turnover.

Budget 2016 changes

Now, Vide Notification No. 13/2016-ST dated 1 March 2016, it is provided that the generic rate of interest would be 15% p.a. However, in cases where Service Tax is collected but not deposited to the exchequer, the rate of Interest will be 24% p.a.

Further, it is provided that in case of assessees with less than INR 60 lacs turnover (in the preceding year) they will be liable to pay interest @ 12% p.a.

The aforesaid Notification will come into effect on the day the Finance Bill, 2016 receives the assent of the President.

The reduction in Interest rate from almost 30% p.a. to 15% p.a. is certainly a welcome move by the Government. This rationalised interest rates will certainly bring smile on the faces of the genuine assessees plagued by funds shortage.

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