As per SEBI guidelines, more service tax will need to be paid for investing in funds. How exactly will this process be executed?
- Mr Ramumurthy
Investors don't have to pay service tax directly; it is deducted from the NAV along with other charges on a day-to-day basis. But the expenses will now go up by about a 3rd per cent on the 1.25 per cent management fee charged by the fund company. Assuming that the management fee goes up to 1.5 per cent, then 12 per cent service tax on that will mean a hike of about 15 basis points, which will be embedded into the NAV annually.
This article was originally published on September 13, 2012.
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