Mutual Fund Agents - Service Tax

[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 ???

AI Summary

Threshold exemption for service tax inapplicable where provider supplied taxable services previously despite tax paid under reverse charge.
The proposed levy subjects services by mutual fund agents to forward-charge service tax. For threshold exemption purposes the value of taxable services provided by the service provider in the prior year is to be counted irrespective of whether liability was discharged by the service recipient under the reverse charge mechanism; if that taxable value exceeded the exemption threshold the provider is ineligible for exemption in the current year. Sub-agents supplying services to main agents must register and are covered by the levy as service providers.