AMFI is hopeful of getting a positive response for exemption on service tax for distributors earning than Rs. 10 lakh as commissions in the forthcoming Budget, said C.V.R Rajendran, CEO, AMFI at the Network FP National Conference held in Mumbai today.
In its Budget wish list sent to the Ministry of Finance, AMFI has sought relaxation on service tax for distributors earning less than Rs. 10 lakh commission annually.
“Though service tax affects the entire distribution community, large players like banks and national distributors have other sources of income. It is the smaller IFAs who are impacted more. Hence, AMFI has sent its representation to SEBI and the Ministry of Finance seeking exemption for distributors earning less than Rs.10 lakh,” said a senior official from a large fund house.
Income tax norms stipulate that a service provider having an annual income of less than Rs.10 lakh need not pay service tax. However, this has not been applicable to mutual fund distributors.
Also, distributors cannot set off the service tax paid on commission with other services if the service tax is deducted at source by AMCs, said a Mumbai based distributor.
According to industry estimates, only around 1,200 distributors earn more than 10 lakh annually. If the Finance Ministry accepts AMFI’s request it will benefit a large number of distributors.
It remains to be seen if the Ministry of Finance provides some relief to distributors in the forthcoming Budget.
