Smaller Mutual Fund Distributors Exempted from Service Tax - Budget 2016-17 - MYREALITY.In, Real Estate, Share Market, Mutual Fund, Insurance
Trending
Powered by Blogger.
Saturday, March 05, 2016

Smaller Mutual Fund Distributors Exempted from Service Tax - Budget 2016-17

Smaller Mutual Fund Distributors Exempted from Service Tax - Budget 2016-17

Mutual fund (MF) distributors with more than Rs. 10 lakh income will be, however, paying the service tax. Budget also stated that MF distributors paying service tax will be issued official service tax registration number and will pay tax like any other service.

Mr. C VR Rajendran, CEO, Association of Mutual Funds of India, said after the amendment to the tax rule only nearly 4,600 distributors out of around 38,000 active agents who earn commission more than 10 lakh will now have to pay service tax.
The service tax burden on mutual fund distributors, however, will now rise to 15% with the budget proposal to introduce Krishi Kalyan cess of 0.5% on service tax for the welfare of farmers.
C VR Rajendran, CEO,
Association of Mutual Funds of India
Earlier in 2015 November, the government had imposed 0.5% swachh Bharat cess on service tax which had raised the service tax from 14% to 14.5%. The new cess will come into force with effect from June 2016.

Mutual fund industry body Association of Mutual Funds in India in its budget wish list had sought relaxation on service tax for distributors earning less than Rs. 10 lakh commission annually. Service tax imposed on mutual fund distributors in the last year’s budget was widely opposed by the mutual fund distribution fraternity.

In 2012, the government had put the services of mutual fund agents under the negative list which exempted them from paying service tax. Till 2012, AMCs were deducting service tax and paying it to the government. In Budget 2015, this exemption was withdrawn.

 "The services provided by MF agent/distributor to a MF or AMC, are being made taxable under forward charge with effect from April 1, 2016 so as to enable the small sub-agents down the distribution chain to avail small scale exemption having threshold turnover of Rs. 10 lakh per year, subject to fulfillment of other conditions prescribed," as per Budget document for 2016-17.


The move is aimed at increasing retail participation in MF industry. The industry has long been seeking relaxation on service tax for mutual fund distributors. There are  44 asset management companies (AMCs) that manage funds of nearly  Rs 12.74 lakh crore.
Smaller Mutual Fund Distributors Exempted from Service Tax - Budget 2016-17 Reviewed by S. Chitra on March 05, 2016 Rating: 5 Smaller Mutual Fund Distributors Exempted from Service Tax - Budget 2016-17 Mutual fund (MF) distributors with more than Rs. 10 lakh in...

No comments:

Google+ Followers