The government has decided to impose service tax on chit fund foremen or those who organise such investment schemes.
According to the Union Budget 2015-16, presented in the Parliament today by Finance Minister Arun Jaitley, chit fund foremen would have to pay service tax.
"Abatement is being withdrawn from chit fund service. Consequently, service tax shall be paid by the chit fund foremen at full consideration received by way of fee, commission or any such amount. They would be entitled to take cenvat credit," the Budget document said.
Chit fund is a saving and borrowing mechanism and comes under the regulations of respective state governments.
In recent times, there have been many instances of people getting duped by fraudulent investment schemes conducted in the garb of chit funds.
