AMFI board is likely to pass on the service tax burden on distributors, said two AMC CEOs on the condition of anonymity. Both CEOs are AMFI board members.
H N Sinor, CEO, AMFI declined to comment on this issue.
“We will not pass on this burden to investors. Distributors might have to bear this burden,” said the CEO of a private sector fund house on the condition of anonymity.
Another CEO said that the board is likely to implement the 2008 AMFI circular which states that the service tax burden has to be borne by the distributors.
Meanwhile, the sales head of a foreign fund house said that there is a proposal to share the service tax equally (i.e. 1/3rd each) between the three stakeholders - AMCs, distributors and investors.
Last week, AMFI is said to have approached the Ministry of Finance and SEBI on service tax issue. The trade body has reportedly requested SEBI to allow fund houses to put all additional levy outside the purview of total expense ratio. Also, it has sought relaxation on service tax for distributors earning less than Rs.10 lakh per annum. Earlier, AMFI had sent a letter to the Ministry of Finance and SEBI seeking relaxation on service tax for such distributors. However, it is understood that both SEBI and the Ministry of Finance not responded to the proposal.
The final decision on service tax will be taken by AMFI board on June 5.
