Interest rates go through roof when it comes to paying to Govt
NEW DELHI, MAR 03, 2011: PARAGRAPH 6.3 of the TRU letter dated 28.02.2011 says the following about the hike in interest rates –
“Pending enactment of the Finance Bill, 2011, the rates of interest are being revised with effect from the 1 st of April, 2011 to a uniform rate of 18% per cent per annum under the existing provisions of sections 11AA and 11AB.”
A quick look at the Interest rates under the various sections of the Central Excise Act and the changes made –
Sr.no. |
Section of the CEA, 1944 |
Rate of Interest in vogue |
Notification No. |
Rate of interest w.e.f 01.04.2011 |
Notification No |
1 |
11AA [Interest on delayed payment of duty] |
15 % |
18/02 CE(NT) dt. 13.05.02 |
18 % |
5/2011 CE(NT) dt. 1.03.2011 |
2 |
11AB [Interest on delayed payment of duty] |
13 % |
66/03 CE(NT) dt. 12.9.03 |
18 % |
6/2011 CE(NT) dt. 01.03.2011 |
3 |
11BB [Interest on delayed refunds] |
6 % |
67/03 CE(NT) dt 12.09.03 |
No change |
--- |
4 |
11DD [Interest on the amounts collected in excess of duty] |
15 % |
68/03 CE(NT) dt 12.09.03 |
No change |
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It is not known as to why the Central Government always wants an extra pound of flesh from the assessee. When it comes to giving, they act miserly as can be seen from the fact that the rate of interest on delayed refunds stands stagnant at “6%” even after nearly eight years . As for the commentary contained in the TRU letter, the rates of interest could also have been made uniform by hiking the one u/s 11AB to 15% rather than making it a towering 18%.
There appears to be no yardstick laid down in hiking this interest rate from 1 st April, 2011 except that it gives the assessees a months respite from the additional burden.
By the way, did some one forget about the existence of section 11DD or was it a purposeful omission?
Last but not the least, it is hoped that after the Union Budget is enacted and the new ‘demon' of section 11AA comes on to the scene, the Central Government would be careful enough to issue a fresh notification under the said section rather than continuing with the present one – debatable…you bet!