DEAR SIR, I AM EARNING COMMISSION FROM MUTUAL FUND 1 LAKH AND EARNING FROM LIC AND GENARAL INSURANCE ABOVE 10 LAKH WHICH IS STILL IS IN REVERSE MECANISAM MY QATION IS THAT FOR SERVICE TAX I SHOULD INCLUDE LIC COMMISSION AND GE INSURANCE COMMISSION

VERY GOOD CLEARIFICATION ABOUT SERVICE TAX.

Very true Mr D Cunha. Such dichotomy specially even after the Call cons of the AMCs regarding the issue. I fall in the category of the IFAs who have not yet registered with the ST dept. and maybe will save this 1.5 lacs. But I am still in constant doubt that I may have to pay the same with late fee also. I fully sympathize with you . You should be able to get the refund. AMFI rather should play a helping hand here.

Thanks for addressing service tax issue. I was discussing the same with one of my cousin brother who is Superintendent with C.Ex. and Customs Dept. He said that if your serviceable income including Mutual fund brokerage exceed Rs. 10 lacs during the financial year, you are liable to pay service tax. The service tax will be applicable on the amount exceeding Rs.10 lacs. So there is an exemption for the first Rs. 10 lacs you have earned. And this exemption is applicable every year provide your serviceable income does not exceeds Rs. 40 lacs during a financial year. Once your serviceable income exceeds Rs. 40 lacs you are liable to pay service tax on the total amount and you cannot claim exemption for the first Rs.10 lacs from the subsequent years. Somebody should clarify this with the Service Tax department.

Dear Mr Venkatraman, You are indeed doing a yeoman service to the IFA Fraternity.Your articles are well researched,with clarity of thought.I salute your selfless efforts in bettering the lot of the IFAs. Special thanks to AMDWA for their untiring efforts &Tammana Varma for her initiative.Look forward to the articles posted on this forum.

I too attended the seminar on service tax organised by ICC (Indian Chamber Of Commerce) wherein Chief Commissioner of Service Tax Sri S.K. Panda specifically replied on my written query sent over e-mail to ICC that those who had commission income of more than Rs. 10 Lakhs in the PY shall not be eligible to claim exemption of tax on 1st Rs. 10 Lakh this year. The logic put forward by him is that, by bringing the service from reverse charge to forward charge only the mode of collection of tax has changed and nothing else. In view of this large distributors cannot avail exemption of Rs. 10 Lakhs this year.

What you have said is logical. Now there was a seminar in CII being addressed by the Chief Commissioner of Service Tax who did and did not answer my question. He said that if I wanted to pay I can pay even before I reached the 10 Lakh limit. Despite me trying to make him understand that I was already paying service tax in a different model I failed to do so. Only I was not identified as a service tax payer because the bulk amount was paid by the AMC. Now the question is whether I should be a victim of logic or go with the flow? I have taken registration but will file a nil return. Service Tax Department should clearly state that all are supposed to pay.

I also feel that the big AMCs who have been doing so many con calls on this service tax clarity issue should have atleast done their home work with the TRU at the MOF, before organizing such calls! May be a learning for them for the next time!!! Good clarity Vijay!

Sir, Thanks for clarification. I honestly feel that you are doing BEST to all IFAs through this forum. No doubt about it. What made me sad/bad is we follow rules, we follow guidelines given by AMFI/AMC and act. This is right way. Even on public forums IFAs asked questions to CAs and they replied that we have to pay service tax if our previous years income was more than 10 lakh. Now, those who issued guidelines has to fix this issue by returning the service tax invoices and for those who paid service tax (like myself) they payment should get adjusted for future months. There should not be injustice to those who follow guidelines and rules - this is what I want to stress.

Thanks Vijay Sir for giving some clarification on a contentious issue. I was of the same opinion after doing my own studies and had planned to pay the service tax after taking the basic exemption of Rs. 10 lakhs.

Such Clarification should have been taken up in the Intial month. You have taken it up after all the Distributor have paid the service tax. Looks obvious that you have just come to know about it.

Dear Mr. Cunha, The issue of service tax exemption for the first 10 lakhs of commission income this year was flagged in an article we posted on 1-Mar-2016 - a day after the Budget, where we carried Yasir Varawala's views. Here is the link: http://wealthforumezine.net/IndustryTrends1290216.html. As I mentioned in todays article, this view was a subject of some debate in the past few months. Unfortunately, legal opinions are coming in now, after most distributors have already submitted invoices for the first quarter.

Dear Vijay Venkatram with high respect to you, your last sentence in this article is bit confusing. "If you are a distributor .... you could have potentially saved service tax @ 15% on half this income - which you have perhaps inadvertently given away since you followed the due process even as you awaited clarity on the exemption" When most of the AMCs sent a FAQ on service tax and clearly mentioned that if income was more than 10 lakh last year, IFA, exemption is not available, what is the meaning of due process? Is there any article in this important forum about any doubts on this subject? This forum is best giving voice to IFAs. Two await clarity, there should be doubt and if there was doubt this would have been discussed in this forum. Yes, we lost 1.5 lakh, but I dont agree we should wait for clarification when it is clearly imposed that we have to submit service tax invoice within 30 days of receipt of brokerage. Following rule is wrong?

This is what happens to the honest and disciplined person in India be an advisor or anybody else! If he does things honestly according to the rules explained by the authorities, he loose money. Those who kept quiet gained 1.5 lakh! Why AMCs gave wrong information? Why proper clarifications were not given by authorities at the initial state itself. Its easy to say that first 10 lakh income is exempted in simple terms instead of making all confusion. Advisors who never took step to register with service tax and not submitted their invoices are benefited by 1.5 lakh right? But what message this episode sends to all? Dont believe what AMCs tell you? Disguisting! This attitude makes people either postpone their obligations towards tax or evade. My simple question what makes authority to be very clear at the beginning itself? What is the responsibility of AMFI here?