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Service Tax
Higher Rate of Interest for Service Tax payment Defaulter (Effective from 1st October, 2014)
To encourage prompt payment of service tax, the interest rates have been amended in following manner:
| Sl. No | Period of Delay | Rate of Simple Interest |
| 1 | < 6 months | 18% p.a |
| 2 | >6 month <1 year | 18% for six month plus 24% for the delay beyond six month. |
| 3 | >1 year | 18% for six month plus 24% for the delay beyond six month upto 1 year plus 30% p.a. for further delay beyond one year |
Further as illustrated in TRU, assume a case where service tax became due, say, on the 6th of July, 2012 and the assessee pays the dues on 6th of December, 2014. In such a case, the interest to be charged would be as below:
(i) 18% simple interest upto September, 30th, 2014.
(ii) For the period from 1st October, 2014 to 6th December, 2014, the rate of interest will be 30% since the period of delay is beyond one year.
As specified in the proviso to section 75, three per cent concession on the applicable rate of interest will continue to be available to the small service providers.
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