AMCs May Have To Bear Service Tax Burden

Mumbai, Sept 29 | Updated: Sep 30 2004, 05:30am hrs
The Central Excise department may have to collect service tax from the 31 asset management companies (AMCs) instead of mutual fund (MF) distributors.

The modalities of this were discussed by MF heads at the AGM of the Association of Mutual Funds in India (Amfi) held in Mumbai on Wednesday.

Industry sources indicated that the nitty-gritty of the collection of service tax will be discussed with tax consultants. Once a roadmap is chalked out, Amfi will make a presentation to the ministry of finance (MoF).

This would come as a relief to the distributors since Amfi-certified agents raised a hue and cry over a letter by the central excise department to them recently.

The letter stated that every agent had to show book of accounts to excise officers from July 2003 onwards.

Distributors were demanding that service tax be deducted from the brokerage of the distributors at the AMCs end. They urged that AMCs should directly pay the service tax to the Excise department instead of the department collecting it from the distributors.

This demand was raised under the aegis of the Mutual Fund Agents Welfare Association (MAWA).