The budget has proposed to withdraw service tax exemption presently available to select services in the mutual fund industry.
This can affect small investors who prefer the mutual fund route. The service tax exemption withdrawal will make their investments expensive. The budget has proposed withdrawal of exemptions on services provided by a mutual fund agent to a mutual fund or assets management company; distributor to a mutual fund or AMC. This change will take effect from April 1, 2015.
The budget has also proposed 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 mutual funds as per SEBI Regulations, 1996.
