NEW DELHI: In a relief to mutual fund distributors, industry body Amfi has put in place a new computation method that will help in reducing their service tax payments.

Mutual fund distributors are required to pay service tax from the commissions earned by them.

"Amfi has framed a computation method of service tax deduction which reduces net service tax payout to 12.28 on every 100 paid as commission to distributors," a member of the industry body said.

"The gross service tax is 14 percent but the net service tax payout comes down to 12.28 percent through this method," he added.

In case a distributor is entitled to get 100 and service tax is 14 percent, then tax will be calculated as net service tax payout = commission payout - commission payout X gross service tax rate/commission payout + service tax.

In other words, the net commission payout works out to 87.72 ( 100-Rs 12.28) instead of 86.

The service tax on mutual fund distributors came into effect from June 1, 2015.

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