Service tax on mf advisor

In a big relief to small mutual fund distributors, the government has proposed to exempt service tax levied on agents earning less than Rs 10 lakh commission annually. However, those distributors earning more than the threshold limit will have to pay service tax of 14%. The move is aimed at increasing retail participation in mutual fund (MF) industry.

"The services provided by MF agent/distributor to a MF or AMC, are being made taxable under forward charge with effect from April 1, 2016 so as to enable the small sub-agents down the distribution chain to avail small scale exemption having threshold turnover of Rs 10 lakh per year, subject to fulfillment of other conditions prescribed," as per Budget document for 2016-17.