PwC has offered to assist AMFI in conducting an impact assessment of GST.
AMFI is likely to approach government once PwC submits its assessment report on the impact of GST on the mutual fund industry, say sources.
Earlier in July, AMFI had organized a presentation on the model GST law through PwC for AMFI members. The report highlighted the implications of the proposed model GST law for the MF industry. Cafemutual has a copy of this report.
The consulting firm has offered to assist AMFI in conducting an impact assessment and also in drafting a representation to the government in the matter, said AMFI.
While operations and procedural modalities are still awaited, there are some concerns about its impact on the mutual fund industry.
One such concern is regarding requirement of state specific registration and compliance. The current Bill says that the service tax has to be paid at a place where it has been consumed. That means, both AMCs and distributors will have to register themselves with the service tax department of the respective states. As a result, the cost of compliance may go up.
Another key issue for the industry is inclusion of securities in the definition of goods proposed by the Bill. Currently, there is no service tax on securities as it doesn’t come under consumable goods. “Security is an investment product. However, if the Bill is implemented in the current structure, every time a fund manager executes trade, the fund will have to pay service tax just like STT. Simply put, it will raise costs substantially and dampen the demand for this product,” said a compliance official requesting anonymity.
It remains to be seen how the government and the industry deals with these issues.
