Service Tax On Mutual Fund Agents

[CA. Puneet Gupta]

The Finance Bill, 2016 proposes to make services provided by mutual fund agents/distributor to a mutual fund or asset management company liable to service tax under forward charge, i.e. the service provider is being made liable to pay service tax ( mutual fund agents / distributors).

I have 2 queries relating to same : -

1. Whether a Mutual Fund Agent / Distributor can avail threshold exemption of ₹ 10 lacs in the year 2016-17 under Notification No. 33/2012- ST provided his value of taxable services in the year 2015-16 was exceeding ₹ 10 lacs ???

2. Whether sub - mutual fund agents who provides services to main mutual agents would also be required to get registered and covered under this levy ???

[KASTURI SETHI]

Sh.CA Puneet Gupta Ji,

REPLY TO QUERY NO. 1- Under Notification No.33/12-ST, value of taxable service for the preceding year (2015-16) is to be considered for availing threshold exemption limit of ₹ 10 lakhs in the current financial year (2016-17). Mutual Fund Agent Service was not taxable during the year 2015-16. Therefore, service provider of mutul fund agent service is entitled to threshold exemption limit of ₹ 10 lakh during the year 2016-17 irrespective of the fact whether turnover of mutul fund service was ₹ 10 lakh or more. The basis of admissibility is that this service was not taxable during the year 2015-16.

REPLY TO QUERY NO. 2 is - 'YES'

[Ganeshan Kalyani]

I agree with the views submitted by Sri Kasturi Sir. The exemption of threshold is made available to mutual fund agent / broker who are now liable to pay service tax under forward charge. Thanks.

AI Summary

Service tax on mutual fund agent services: threshold exemption available for newly taxable agents; sub agents must register and comply. Agents and distributors of mutual fund services are placed under service tax by forward charge. Because the service was not taxable in the preceding year, newly taxable mutual fund agents may claim the threshold exemption in the initial year of levy irrespective of prior turnover. Sub agents providing services to principal agents are also taxable and must register and comply with the levy.