Circular No. 66/15/2003-ST
Nov 5, 2003

Government of India
Ministry of Finance
Department of Revenue

Subject : Applicability of service tax on commission income earned on distribution and marketing of units of mutual fund.

I am directed to say that some doubts have been raised regarding application of service tax on the activity of Mutual FUnd Distribution as to whether

1) the comission receivd by distributors on mutual fund distribtion as liable to Service Tax under the category of Business Auxiliary Services ?

2) the services provided is exempt from service tax in terms of Notification No. 13/2003 dated 20.6.2003?

            In this connection, it is clarified that the services provided as reffered above are primarily in nature of the services of commission agent in relation to clause (ii) and (iv) of the category of services mentioned in the defintion of Business Auxiliary Services and hence should be leviable to service tax under this category. This activity does not get covered under exemption Notification No 13/20003-ST dt 20.6.2003 as this is not in relation to sale or purchase of goods. The exemption provided under Notification 13/2003-ST is applicable only for commission agents dealing in goods.

            Field formations and trade may be informed accordingly.

Manish Mohan
Under Secretary CX IV

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Category : Service Tax (3413)
Type : Circulars (7886) Notifications/Circulars (32645)

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