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06 Jul 2012 05:43 AM
Mutual fund industry unclear about the implementation of service tax on exit load 
Pallabika Ganguly
 

SEBI and industry officials are still in discussion on the implementation.

The Government has recently issued a negative list of the services which are not supposed to pay service tax. Since exit load is not on the negative list, SEBI and MF industry officials are in discussion on how to implement the service tax.

“The regulator is still in a discussion with AMCs on how to implement the service tax on exit load. We have yet to reach any concrete decision,” said Vijai Mantri, MD & CEO of Pramerica Mutual Fund.

There are three types of service tax implemented on the mutual fund industry. One on asset management, other on brokerage paid to the distributors and now on exit load. So far, AMCs were charging service tax on asset management to investors though brokerage is exempted from service tax.  The new tax which will be added is the service tax on exit load.

This new tax will impact investor returns because they might have to pay additional 12.36 percent as service tax on exit load.  

Service tax will not be imposed on exit load until SEBI drafts a clear process of charging it

 
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