New Delhi: Delayed payment of tax will now attract a higher 12 per cent interest rate while government will pay assesses only six per cent for advance tax payment.

This follows the promulgation of Taxation Laws (amendment) Ordinance on September 8, which also specifies the rates of tax collected at source (TCS) for alcoholic liquor, scrap, timber and other forest produce.

According to the new norms, the rate of interest payable to assesses under various provisions of Income Tax Act, Wealth Tax Act and Expenditure Tax Act has been reduced to six per cent.

The move follows reduction in the interest rates on all government securities to around six per cent. However, the interest chargeable from assesses under the same provisions have been hiked to 12 per cent from September 8, 2003.

The move assumes significance in the light of high incidence of delay in tax payment.

The Ordinance also specifies TCS on alcoholic liquor and scrap at one per cent, while it is 2.5 per cent for timber and forest produce and five per cent for tendu leaves.

The Centre, state government and public sector companies, clubs and embassies have been excluded from the TCS ambit.

Ship breaking activities would be exempted from paying tax if they pay interest payable outside India, as provided in Section 10(15)(iv) of Income Tax Act.

A new section 10BA has been inserted in the Income Tax Act to provide for a deduction of 100 per cent of the profits derived from export of wood-based handicrafts items.

Interest payable to Nordic Investment Bank shall also be exempt from income tax from now on.

PTI