Service Tax — Interest in case of delayed payment of Service Tax to the Government — Clarification - Service Tax - 3/DGST/98

Service Tax — Interest in case of delayed payment of Service Tax to the Government — Clarification Service Tax, Circular No. 3/DGST/98, dated 16-11-1998 Trade Notice No. 50/CE/98(Service Tax), dated 27-11-1998 of the Chandigarh Commissionerate Attention of the Trade and all other concerned is invited to the practice being followed in relation to charging of the interest in case of delayed payment of service tax to the Government. 2. As per Section 75 of the Chapter V of the Finance Act, 1994, the interest is to be charged at the rate of one half percent simple interest per month or part of the month for which the payment is delayed. In case, where, the payment is due on 15th (as per the earlier provision)/or 25th of the month (as per new provision) and the payment is made on 1st of the next month, then there is delay of 16/17 days or 6/7 days respectively as the case may be, in making payment of Service Tax to the Government. In such cases, interest should not be charged for two months, rather, it is clarified that the period of one month should be considered with reference of 16th/26th of the month to the 15th/25th of the next month and the interest should be charged for one month only.