AMFI writes to GST Commissioner on investor concerns
The Association of Mutual Funds in India (AMFI), the industry body that represents asset management companies, made a representation to GST Commissioner Upender Gupta last month on the industry’s concerns that mutual funds will become more expensive for investors in the new tax regime.
In the representation, AMFI has asked that the GST Model law should provide for centralised registration and reflect details of all the places of business. The current provisions of the law “would impose an enormous burden of compliance on the assessees. Even if the assessee operates from a single place of business, they would be required to file one annual return and four monthly returns, namely, statement of input supplies, statement of output supplies, regular return and TDS return,” increasing the compliance costs.
In addition, AMFI has asked that activities or supplies between branches and head office or vice versa should neither qualify as taxable nor free supplies as envisaged under Schedule I of the Model Law.
Also, it has asked that “branches should be deemed to be suppliers so that they are eligible to avail input tax credit of the GST paid by them on their expenses.”
“It needs to be noted that in the MF sector, the branches undertake marketing of the schemes, maintain relationship with unit-holders and distributors, etc, which are only auxiliary to the investment management services provided by an AMC. They do not undertake any supply of investment management service and hence, they may not be required to be registered under the GST law,” the representation added.
Role in saving process
Making a case for lower taxation, mutual funds play an important role in accelerating the saving-investment process in India, on account of their unique characteristics in providing to investors the benefits of expert management, diversification, continuous as well as convenient purchase and sale of securities under the strong regulatory framework of SEBI. Such services cannot be arranged by investors, on their own, the note said.
Any move to increase the tax load, hence, would drive away the growth that this sector has seen so far. Under the present VAT and service tax laws, transactions in securities are not taxed.
It has also said that the AMC and fund should not be treated as ‘related persons’. “The fund comprises the unit-holders who have invested in the MF. By recovering management fees and expenses from the fund, the AMC is effectively recovering such fees/expenses from the unit-holders.
This is since such expenses are deducted from the net value of assets of the fund and the unit-holders are entitled to only the remainder of the asset value of the fund. Having regard to the foregoing and considering that the unit-holders cannot be said to be related to the AMC by any stretch of imagination, it is submitted that the recovery of AMC fees/expenses cannot be said to have been influenced by the relationship between the AMC and the fund.” It has also asked from the commissioner that exit loads should not come under the purview of the GST.
-Source:- http://www.thehindubusinessline. com/markets/stock-markets/amfi/article9354068.ece