CHIEF GENERAL MANAGER
MUTUAL FUNDS DEPARTMENT

All Mutual Funds Registered with SEBI
Unit Trust of India
sociation of Mutual Funds in India

Dear Sirs,

We have received a representation from Association of Mutual Funds in India (AMFI) that the service tax of 5% on the management fees of asset management companies imposed in the recent budget may be allowed to be charged to the schemes over and above the present limits of total expenses specified under Regulation 52(6) of SEBI (Mutual Funds) Regulations, 1996.

We have examined the matter at length. It has been decided that the passing on of the service tax to the unitholders over and above the present limits of total expenses cannot be allowed. However, considering the representation of AMFI, it is clarified under Regulation 52(4)(xiii) that mutual funds can charge the service tax to the schemes as an item of general expenditure. However, the mutual funds must comply with the limits on expenses prescribed under Regulation 52(6), so that there is no additional burden of expenses on the unitholders.

Yours faithfully,

P.K.NAGPAL