Amendments proposed for MF industry

Key proposals for the mutual funds industry

Arun Jaitley revealed a few proposals that will affect the mutual funds (MF) industry. Here are the relevant proposals

a) To amend the provisions of the Income Tax Act so as to provide tax neutrality on transfer of units of a scheme of a mutual fund under the process of consolidation of schemes of MFs as per Sebi Regulations, 1996.

b) To levy a surcharge @12% as against current rate of 10% on additional income-tax payable by companies on distribution of dividends and buyback of shares, or by mutual funds and securitisation trusts on distribution of income.

c) Exemptions are being withdrawn on the following services:

 - services provided by a mutual fund agent to a mutual fund or assets management company;

 - distributor to an MF or AMC

d) Services provided by mutual fund agents, mutual fund distributors and lottery agents are being brought to under reverse charge consequent to withdrawal of exemption on such services.