The Budget 2015 provision to levy Swachh Bharat Cess on all services comes into effect from November 15, says a Central Board of Excise and Customs (CBEC) notification issued yesterday.
From November 15, 0.50% Swachh Bharat Cess will be levied on service tax. This will increase the service tax burden of distributors by 50 basis points, which means the gross service tax payout goes up to 14.50%.
According to industry estimates, the mutual fund industry paid Rs. 6,000 crore commission to distributors last fiscal. A 0.50% Swachh Bharat Cess translates into a payout of Rs. 30 crore.
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 In Budget 2015, this exemption was withdrawn.
