No Service Tax on entry and exit load of mutual funds – Really?
The question: Is service tax chargeable on the ‘entry and exit load’ amount charged by a mutual fund to the investor?.
Board has examined the issue and concluded and clarified that
“entry and exit load” charged by mutual fund would not attract service tax levy under the category of fund management service.”
Here is the catch! Board says it is not taxable under the category of fund management service. Is it leviable under any other category?
The Board’s clarification has a rider,
In a mutual fund, fund management activity is undertaken by an asset management company (AMC) right from the stage of inception of mutual fund. For its services of fund/asset management, (i.e., a periodic/recurring fee) an AMC charges the mutual fund an ‘investment and advisory fee’, in accordance with provisions contained in the SEBI regulation. This fee is chargeable to service tax under ‘fund management service’. Similarly, service provided by the distributors/ selling agents, brokers, custodians, trustees etc., to the fund, is also taxable under respective taxable service such as business auxiliary service, stock broking service and banking & other financial services.
CIRCULAR NO. , Dated : May 15, 2007