In a press release, FIAI has expressed its gratitude to the Finance Ministry for acceding to its request of moving from the reverse charge to forward charge mechanism on the service tax on commission of mutual fund distributors.
According to the release, FIAI has been continuously pursuing this issue with the Finance Ministry for the last ten months.
The forward charge mechanism allows all distributors to claim CENVAT credit on the service tax paid by them for availing various services. At the same time it also ensures that many small distributors, IFAs and sub-brokers below the threshold of Rs. 10 lakh annual income are exempted from service tax on commissions.
FIAI is a trade body of distributors comprising members of intermediaries like banks, national distributors and IFA Associations.
