The payment of interest for late payment of service tax is mandatory and cannot be waived. However, if you believe that the failure to pay the tax on time was due to reasonable cause and was not intentional or due to negligence, you may request a penalty exemption. It is important to note that all taxes and interest due must be paid before a request for a penalty exemption is considered. Under the previous provision, the service tax penalty could not be relaxed after an order.
However, under the new provision, 75% of the penalty can be exempted if the payment of the service tax and the interest due are paid within 30 days of the order. In cases of fraud, 75% of the fine can be exempted if the service tax is paid, along with interest due and a 25% penalty within 30 days after the order is placed. Under the new provisions, late payment of service tax entails a minimum non-discriminatory penalty of 10% of the tax liability for services. Late filing of semi-annual returns on Form EXP-2 by exporters who used ST exemption for available GTA services will incur a two percent penalty for every 30 days or fraction thereof that a tax return or report is delayed.
Under this provision, penalty for late payment of service tax can be eliminated for reasonable reasons. In cases of fraud, 85% of the amount of the penalty can be exempted if the service tax liability plus interest and the 15% penalty are paid within 30 days of notification. Underpayment or late payment of estimated income tax or LLET (for tax years beginning before January 1, 2018) will incur a 10 percent penalty for non-payment of any estimated income tax installment within the time limit prescribed by law. Underpayment of estimated income tax or limited liability tax, LLET (for tax years beginning January 1, 2018) will incur an amount equal to the underpayment or late payment multiplied by the interest rate owed by the Tax.
It may be an advantage for you to wait until you pay the tax due in full before requesting penalty relief under the Service's first-time penalty reduction policy. Article 73 (of the Finance Act) provides for termination of procedure if the tax together with obligation to pay interest has been settled before notification is issued. Late payment and lack of withholding or collecting taxes as required by law will incur a two percent penalty for every 30 days or fraction thereof that a payment is late. The required tax identification number, permit, license or other authority document not obtained in a timely manner will incur a 10 percent penalty on any cost or fee for identification number, permit, etc. required. Lastly, there is no provision for exemption from payment of late payment surcharge under Rule 7 (c) of Services Tax Rules of 1944 and appellant is required to annul it.
Last date for semi-annual return on Form EXP-4 of exporter who has made use of ST exemption for service provided by commission agent located outside India.
