1. In Union Budget, 2015, as a policy decision to prune exemptions, the exemption to services provided by mutual fund agents/distributors to an asset management company was withdrawn. However these services were put under reverse charge liability, i.e., the Asset Management Company was made liable to pay service tax for the services received from such agents/distributors. Services provided by mutual fund agents/distributor to a mutual fund or asset management company are being put under forward charge, i.e. the service provider is being made liable to pay service tax. The small sub-agents down the distribution chain will still be eligible for small service provider exemption [threshold turnover of Rs 10 lakh/year] and a very small number will be liable to pay service tax. Accordingly, Rule 2(1)(d)(EEA) of Service Tax Rules, 1994 making service recipient, that is, mutual fund or Asset Management Company as the person liable for paying service tax is being deleted along with consequential changes in notification No. 30/2012-ST.
2. The liability to pay service tax on any service provided by Government or a local authority to business entities shall be on the service recipient.
Consequently, notification No. 30/2012-ST is being amended so as to delete the words „by way of support services‟ appearing at Sl No6 of the Table in the said notification with effect from 1st April, 2016. Further, 1st April, 2016 is being notified as the date from which the words „by way of support services‟ shall stand deleted from paragraph 1 clause A (iv), item (C) of notification No. 30/2012-ST.
The above changes shall come into effect from the 1St day of April 2016
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II SECTION 3, SUB-SECTION (i)]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
Notification No.16/2016-Service Tax
New Delhi, the 1st March, 2016
G.S.R.264 (E). In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994), the Central Government, hereby appoints 1st day of April, 2016 as the date from which the provisions of clause(b) of sub-paragraph (i) of paragraph 1 of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 07/2015 – Service Tax, dated the 1st March, 2015, published in the Gazette of India, Extraordinary, vide number G.S.R. 161(E), dated the 1st March, 2015, shall come into force.
Under Secretary to the Government of India