Deadlier Interest

By G Natarajan, Advocate, (Swamy Associates)

ALL the interests payable under the Customs, Central Excise and service tax have been hiked from 13 p.a. to 18 %, which is nothing but steeper. While the maximum penalty payable under the most stringent penal provisions (Section 11 AC for Excise, Section 114 A for Customs and Section 78 for Service Tax) can be reduced to 25 % of such duty / tax, within 30 days of the order passed in this regard, the interest of 18 % is as harsh as a penalty. Though a lesser rate of 15 % has been prescribed for those small service providers having a annual turnover of less than Rs.60 lakhs, it is still going to be a heavy burden on them.

One, rather only one good thing about this hike of rate is making it effective from 1 st April 2011, instead of giving immediate effect like in the past, which will go a long way in easy computation of interest liability.

Before parting...

Why the interest payable by the Government for delayed refunds are still maintained at a meagre 6 %?