Delayed payment of excise duty/Service Tax - higher rate of interest likely - Board wants to study trend
Interest rates are rising and the government does not want to be left out. It wants a cut in the pie. CBEC has noticed that the Prime Lending rates (PLR) of Banks currently is around 12.5% to 13.5%.
Obviously if you have to pay the bank 13.5% interest to borrow money to run your business, it makes perfect economic sense to borrow it from government by not paying taxes and duties. The current rate of interest for delayed payment of excise and customs duties and Service Tax is 13%. You save a half percent and you don't need to run around banks and produce all kinds of securities and sureties. Simply don't pay your taxes on the due dates, but pay them with interest when you can.
But the Government is not going to sleep too long. The Board is collecting Revenue trends rather delay trends and if the PLR goes any step higher the interest rates for delayed payment of Customs, Excise and Service Tax are sure to go up. After all it is a market driven tax collection!