Service Tax Late Payment Penalty

Service providers providing taxable services of over Rs.10 lakhs per annum are required to pay service tax in India. For proprietorship firms and partnership firms, service tax payments are due quarterly. For private limited company, limited liability partnership and one person company, service tax payment is due monthly. (Know more about service tax payment due dates) Service tax payment can be made online through net banking for all assesses having a service tax due of Rs. 1 lakh or more in the preceding financial year. Others can make the payment through cheque or demand draft. In this article, we look at the penalty for service tax late payment.

Service Tax Late Payment

The Finance Act, 2015 has made changes to the service tax late payment provisions to ensure fairness is maintained across the board. Prior to the introduction of the Finance Act, 2015, service tax late payment penalties used to be Rs.100 per day or 1% per month, whichever is higher. However, the same has been changed as follows under the recent Finance Act, 2015.

Amount of Penalty

Under the old provision, service tax late payment penalties used to be Rs.100 per day or 1% per month, whichever is higher.

As per the new provisions, late payment of service tax attracts a non-discriminatory minimum penalty of 10% of service tax liability. In case of fraudulent attempt to evade or make late payment of service tax, a minimum penalty of 100% of service tax liability is applicable.

Maximum Penalty

Under the old provision, Service Tax Late Payment Penalty was capped at 50% of service tax liability. As per the new provisions, there is no maximum ceiling prescribed in case of fraud.

Waiver of Penalty

Under the old provision, Service Tax Late Payment Penalty could be dropped on grounds of reasonable cause. As per the new provisions, late payment penalty can be completely waived if service tax and interest are paid within 30 days of serving of notice. In case of existence of fraud, then 85% of the penalty amount can be waived off, if the service tax liability + interest + 15% penalty is paid within 30 days of serving notice.

Service Tax Penalty Relaxation after Order

Under the old provision, service tax penalty could not be relaxed after an order. However, under the new provision, 75% of the penalty can be waived, if service tax payment and interest due is paid within 30 days of order. In case of fraud, 75% of the penalty can be waived, if service tax payment, interest due 25% penalty is paid within 30 days of order.

Back to Learn

Frequently Asked Questions

Common questions about Service Tax Late Payment Penalty Regulations India.

The penalty for late payment of service tax is a minimum of 10% of the service tax liability. If there is a fraudulent attempt to evade or make late payment, the minimum penalty is 100% of the service tax liability.

No, there is no maximum ceiling prescribed for the penalty in case of fraud under the new provisions of the Finance Act, 2015.

Yes, the late payment penalty can be completely waived if the service tax and interest are paid within 30 days of serving the notice. In case of fraud, 85% of the penalty amount can be waived off if the service tax liability, interest, and 15% penalty are paid within 30 days of serving the notice.

Yes, under the new provisions, 75% of the penalty can be waived if the service tax payment and interest due are paid within 30 days of the order. In case of fraud, 75% of the penalty can be waived if the service tax payment, interest due, and 25% penalty are paid within 30 days of the order.

Prior to the Finance Act, 2015, the penalty was either Rs. 100 per day or 1% per month, whichever was higher. The new provisions introduced a minimum penalty of 10% of the service tax liability for late payment and a minimum penalty of 100% of the service tax liability in case of fraud.

Yes, for proprietorship firms and partnership firms, service tax payments are due quarterly. For private limited companies, limited liability partnerships, and one-person companies, service tax payment is due monthly.

Service tax payments can be made online through net banking for all assesses having a service tax due of Rs. 1 lakh or more in the preceding financial year. Others can make the payment through cheque or demand draft.

Service providers providing taxable services of over Rs. 10 lakhs per annum are required to pay service tax in India.

No, under the new provisions, the late payment penalty cannot be dropped on grounds of reasonable cause. However, it can be waived or reduced if the service tax, interest, and a portion of the penalty are paid within the specified timeframe.

The Finance Act, 2015 introduced a non-discriminatory minimum penalty of 10% of the service tax liability for late payment, ensuring a consistent penalty rate across all cases. Additionally, it provided provisions for waiving or reducing the penalty if the service tax, interest, and a portion of the penalty are paid within the specified timeframe, promoting fairness and providing relief to service providers.