SIGN IN SUBSCRIBE

News Update

US Presidential Poll: Tall promises by Hopefuls elbow economy closer to tax-doom-loop!Sourav Ganguly goes to Police against cyberbullyingYadav calls for development of sustainable, Inclusive low-carbon transport systemsFed lives up to global expectations; cuts interest rate by 0.5% - first cut in last 4 yearsMandaviya chairs meeting to provide Social Security to Gig and Platform WorkersCus - Import of Areca Nuts - Department did not follow procedure laid down by CBEC for verification or testing/re-testing, to establish true origin of goods; Nuts imported from Sri Lanka otherwise meet requirements for duty-free import under Notfn No 26/2000-Cus: CESTATCAQM announces revised GRAP schedule for Delhi-NCRChina to be on top of agenda at Quad meeting: White HouseCus - No proper evidence is found towards Customs Officer's involvement in fraud, the allegation that appellant has actively colluded with Customs officials cannot legally sustain, penalty imposed on appellant also cannot sustain: CESTATIndia's position is of a 'Vishwa Bandhu' in global world order: CDS Gen Anil ChauhanST - The contracts being composite in nature and demand having been raised under Construction of Residential Complex Services, demand of service tax cannot sustain for the period after 01.07.2010 also: CESTATGovt organises 'FAME's Success in Transforming India's EV Landscape: From Vision to Reality'Death toll rises to 21 in second wave of blasts in Lebanon - it was Walkie-Talkie after pagerI-T - Miscellaneous income such as commission, discount charges, sale of wastages and diesel sales are to be treated as income derived from industrial undertaking: HCGermany halts exports of weapons to IsraelI-T - If any statute has been enacted, there cannot be insertion of any word beyond the contents of the statute: HCI-T - Contributions to PF/ESI paid before the due date u/s 139(1) of the Act are allowable as deduction: ITATBaltimore Bridge collapse: US seeks USD 100 mn compensation from Singapore-based ship ownerI-T - No license is granted under Income tax Act to misuse presumptive scheme of taxation and camouflage undisclosed income from unexplained sources under guise of turnover/gross receipt: ITATI-T - If no return of income is filed by tax-payer, then appeal can only be admitted by CIT (A) only when tax-payer has paid advance tax which was payable by him: ITATFaux cybercrime platforms busted in global operations; 51 arrested by EuropolI-T - Dismissal of assessee's appeal in limine by CIT(A), without going into merits of issues, solely due to non-appearance of assessee, is unsustainable, being in direct contravention of Section 250(6): ITATI-T - CIT(A) has powers co-terminus with those of the AO and is permitted under law to make own inquiry or direct AO to inquire into the matter, in case of assessee's absence : ITATIMF pauses Mission to Moscow after Kyiv protestsCabinet okays National Centre of Excellence for Animation, Visual Effects & GamingCabinet accepts recommendations of High-Level Committee on Simultaneous ElectionsCabinet gave approval for CHANDRAYAAN-4 MissionIncome tax collections till Sept 15 up by 16%After Moon and Mars, India sights science goals on VenusCabinet approves Pradhan Mantri Janjatiya Unnat Gram AbhiyanISRO to develop launch reusable vehicle with high payloadJapan, France to ink military pact by year-endFM holds 2nd review meeting on Capex for Ministry of RailwaysCyber fraud - posing as CBI officer - Railway staffer loses Rs 9 lakhGlobal Renewable Energy Meet: Investment commitments of Rs 32.45 lakh Cr poured: JoshiProvisional Attachment - Precaution, Persecution, Penury?Dak Ghar Niryat Kendra expands export services with automated IGST Refund facilityThe Delay Dynamics
 
Mutual Fund distribution - Service tax makes a comeback

FEBRUARY 28, 2015

By Pratik Shah, CA and Jigar Doshi, CA

SERVICES provided by mutual fund agents or distributors to mutual fund (‘MF') or Asset Management Company ('AMC'), as the case may be, were liable to service tax under reverse charge mechanism (RCM) prior to the negative list regime. As a boost to the mutual fund industry which was agitated over the levy, the said services were removed from the RCM ambit in the negative list regime wef 1 July 2012.

Now, vide Notification 7/2015 – Service Tax dated 1 March 2015 the Finance Ministry has brought back this levy by removing the said exemption and taxing the services in hands of AMC or MF (taxing under full reverse charge).

Given the above, distribution of mutual funds would again attract service tax and it is now the decision of mutual fund houses to whether absorb this tax / to provide relief or to pass on the same.

The Centre's move to remove service tax exemption to mutual fund agents / distributors would lead to inflating the costs to the investors. This is because in case of MF's, there is no Cenvat credit availability as no output service tax liability on purchase and sale of units.

It would be relevant for the MF industry to evaluate the impact of the said change and optimise the taxes if there is any possibility. Also tracking of records pertaining to one time / trail commission to the agents / distributors would be of paramount importance to MF industry enabling them to make payment of service tax under RCM.

The above change is effective from 1 April 2015.

(The authors are Partner and Senior Manager of SKP Business Consulting LLP and the above views expressed are personal.)

( DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the sites)

POST YOUR COMMENTS
   

TIOL Tube Latest

TIOL Tube
TIOL Tube brings you an interview with former US Secretary of Treasury, Mr. Larry Summers who was recently in Delhi.

TOP NEWS


AR not Afar by SK Rahman

VISION 360



Shri Ram Nath Kovind, Hon'ble 14th President of India, addressing the gathering at TIOL Special Awards event.

TII LATEST

TIOLCORPLAWS LATEST