Service Tax Payment Due Dates & Penal Interest

Service Tax is a form of tax which is paid by a service provider to the central government. As per the published rules, service providers are liable to pay service tax to the Central Government in regular intervals. In certain cases, this interval is monthly and in some cases this interval is quarterly. However, failure to pay service tax on time will attract interest as well.

Due Dates for Service Tax

The Government of India has categorized service tax payers under two categories, namely:

• Individual/ Partnership Firms
• Others

Individual/ Partnership firms

The Individual/ Partnership firms are required to pay service tax on a quarterly basis. They are liable to pay their collected service tax on the 5^th day of the upcoming quarter. However, if the assesse is making an online payment then he gets an additional day as grace period, i.e, 6^th of every quarter.

Let’s take an example to make things clear.

Suppose Mr. X has collected INR 8000 as service tax on April 15. His due date for payment of service tax would be the 5^th day of upcoming quarter, which is, July 5. If Mr. X decides to pay his service tax online then his due date would become July 6.

Others

Apart from individuals and partnership firms, all other entities are required to pay their service tax on a monthly basis. The due date for such entities is 5^th of every month. However, if the assesse decides to make online payments, then its due date would be 6^th of every month.

Exception

There is an exception to the above mentioned rule. Service Tax collected during the month of March is required to be credited to the Central Government within March 31.

Late Payment and Interest

Before the Budget 2015 took place, late payment of service tax attracted an interest of 18% (if gross turnover was equal to more than INR 60 lakhs) and 15% (if gross turnover was less than INR 60 lakhs).

After the Budget 2015, the rate of interest on late payment of service tax has now been revised to:

• 18% If the extent of delay is upto 6 months
• 24% If the extent of delay is between 6 months to 1 year
• 30% If the extent of delay exceeds 1 year.

The rate of interest would be charged on simple interest basis.

The new rate of interest is effective from October 1 2014 and continues to be in application till the present date.

 Additional Guidelines:

• Excess payment of Service Tax:  The assesse can adjust the amount paid in excess of the actual service tax in the next quarter or claim a refund.
• Service Tax collected in excess of the actual amount: The excess amount should be paid to the Central Government within the upcoming quarter.
• Consideration for cheques: The Central Government considers the date of cheque to be day of payment, rather than the cheque clearing date.