AMCs will charge a service tax of 12.36% on distributor commissions till the Finance Bill is passed by the parliament.
AMCs await more clarity from the government on exemption of service tax for distributors. Distributors will be exempted from service tax only after the Finance Bill is enacted. Thus, AMCs are unlikely to exempt distributors from service tax from April, 2012 onwards.
Some officials say that they will deduct 12.36% service tax till they get an official confirmation from a legal authority. Some AMCs are consulting legal experts on this matter. Service tax was raised from 10.30% to 12.36% in the recently presented budget.
Distributors have been paying 10.30% service tax on commissions till now.
“We have to wait till it is mentioned in the official gazette which could happen sometime in April or May. We have to bear a service tax of 12.36% as per the budget announcement till the Finance Bill is passed,” says Ramesh Bhat, President, IFA Galaxy.
Having
faced a series of swift and sweeping regulations, starting with the entry load
ban, the service tax exemption will provide much-needed relief to mutual fund distributor.
