49. Determination of interest. -

(1) For the purposes of this rule the tax liability shall be deemed to have been discharged only if the amount payable is credited to the account of the State Government by the due date.

(2) If the dealer fails to pay the amount of tax by the due date, he shall be liable to pay the outstanding amount along with an interest at the rate of two per cent per month or parts of a month proportionately computed, starting with the first day following the due date till the date of actual payment:

Provided that till such time the amount of tax outstanding and the interest payable thereon are not paid, it shall be deemed that the dealer is in default and the consequences of penalties as provided under sub-section (5) of section 42 and thereafter sub-section (6) of section 42 of the Act shall follow.

Calculation of interest.

Illustration 1.- X, a dealer, fails to pay tax amounting to Rs.31 lakhs payable by 20^th March. X pays the amount on 30^th March.

The default has continued for 10 days. The interest payable by X is computed as follows:

2% of the amount of default for 10 days=2% of Rs.31 lakhs x10/30 =Rs.20,666.

Illustration 2.- Y, a dealer was liable to pay tax of Rs.5 lakhs for the month of May payable by 20^th June. Y pays only Rs.4 lakhs by 20^th of June. Thus Y has defaulted in respect of Rs. 1 lakh. Y pays the balance amount on 15^th of July.

The default is for 25 days. The interest payable by Y is computed as follows:-

2% of the amount of default for 25 days=2% of Rs.100000x25/30=Rs.1,666.

Illustration 3.- For a dealer who has defaulted payment of tax of Rs.10000 for 2 months and 5 days interest is computed as follows:-

2% per month of the amount of default = 2% of Rs.10000 x (2+5/30) =Rs.433.