Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: articles on VAT and GST in India :: TDS :: VAT Audit :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: form 3cd :: ACCOUNTING STANDARD :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: cpt :: due date for vat payment :: empanelment :: list of goods taxed at 4%
 
 
Service Tax »
  Changes In Central Goods And Services Tax Rules, 2017
 GST return filing to be a breeze for small businesses
 Changes In Central Goods And Services Tax Rules, 2017
 Simple tax made complex
 Govt may review monthly GST return filing process
 Central Goods and Services Tax (Eleventh Amendment) Rules, 2017
 Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017
 Composition Scheme - the Central Goods and Services Tax (Removal of Difficulties) Order, 2017
 Govt asks taxpayers to file GST return for July by Tuesday
 FAQ On Government Services Under GST
 Income Tax Appellate Tribunal, Visakhapatnam Bench List Of Division Bench Cases Posted Before During The Period From 03rd Octombar To 13th October , 2017.

Recent direction to force MF distributors to pay service tax ill-advised
May, 12th 2015

There's pressure on MFs to cut down on expenses that mutual funds charge their investors. However, the recent direction taken by the fund industry may be counter-productive and be harmful for the development of fund investing in India. A few days ago, an internal communication of the industry's lobbying body, the Association of Mutual Funds of India (AMFI) asked its members to force fund distributors to pay service tax themselves instead of being able to pass it on to consumers. Here's what it told its members, "On the question of Service Tax on distribution of mutual fund products, it was clarified that the Service Tax will have to be borne by the distributors for the services provided."

This is a bad idea, and not just for one reason. Firstly, fund expenses in India have been edging higher and should be brought down. I've written about this issue in this newspaper earlier. To recap, this is what the situation has been so far. Over the last 3 years, the number of regulatory changes has brought the cost to equity fund investors to 3% per annum of the value of their investments.

Till 2012, this number was capped at a level ranging from 1.75-2.5%. Within this, there was a limit of up to 1.25% for management fees and the rest was for actual expenses.

If actual expenses were lower, then funds stayed under their limit. However, acceding to demands from the fund industry, Sebi clubbed the two in a single limit. Since then, every fund hits the ceiling that is available to it.

However, the actual expenses that investors are charged are even higher. One reason was a sharp hike in the service tax.

Earlier, this was charged only on management fee and that too had to come from within the overall limit. However, with the expenses in a single pool, service tax became chargeable on the entire amount, and Sebi permitted it to be charged over and above the limit. From this financial year, commission paid to distributors has also been brought into the service tax net. Now, faced with increasing criticism about high expenses, comes this latest move that I have described above. It so happens that in every category of service, the customer pays service tax additionally to what the seller charges. This principle is universally followed, including in other financial services like insurance. However, what the funds are trying to do is something unfair. AMFI is attempting to limit expenses by forcing distributors to pay service tax out of their own pockets while its own members (the funds themselves) will continue to pass on service tax to investors.

How this ridiculous discrimination against distributors strikes anyone as a legitimate way of reducing expenses charged to investors is a puzzle.

Moreover, having observed the way the industry has worked, my suspicion is that big powerful distributors like banks will still manage to extract whatever they lose on the service tax front and the axe will actually fall on smaller independent financial advisors (IFAs). That's a pity because many of these IFAs have played a great role in expanding the reach of MFs.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Website Ranking Website Ranking Company Website Positioning Alexa Ranking Website Promotion Website top 10 ranking website top 10 promotion search engine result promotion Strategic Internet Marketing Website Optimization Website Ranking Factors

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions