Service tax on Mutual funds Commission

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Satish R Vasani (Querist)
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08 July 2016 If person is Mutual fund Agent as well as LIC Agent. LIC Commission is under Reverse charge mechanism & Mutual fund Commission is covered under forward charge. While calculating threshold exemption turnover limit of 10 lakhs for SSP, whether turnover of LIC included or not?

Satish R Vasani

Satish R Vasani (Querist)
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14 July 2016 Please give your opinions

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 Great question!

Here’s how the **threshold exemption limit** works when a person earns commission from **both LIC (under Reverse Charge Mechanism - RCM)** and **Mutual Fund (under Forward Charge)**:

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### Key points:

* **Threshold exemption limit for Service Tax (Small Service Provider - SSP)** is **aggregate turnover** of taxable services in a financial year.

* **Turnover under RCM**: The service recipient is liable to pay service tax under Reverse Charge.

* In this case, the **service provider (agent) does NOT pay service tax on the LIC commission** — it’s the buyer (LIC or someone else) who pays under RCM.
* For the agent, the **LIC commission income is taxable service income but NOT subject to service tax payment by the agent**.

* **Turnover under Forward Charge**: The service provider is liable to pay service tax.

* Mutual Fund commission is under Forward Charge, so the agent must pay service tax on the commission earned here.

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### Regarding inclusion of LIC commission in threshold limit:

* **Yes, both LIC and Mutual Fund commissions are included in the aggregate turnover for calculating the Rs. 10 lakh SSP threshold exemption**.

* Even though service tax liability on LIC commission is under RCM (paid by the recipient), the **agent's total commission income (LIC + Mutual Fund) counts towards the turnover for exemption threshold**.

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### Summary:

| Service Type | Service Tax Liability | Included in Threshold Limit? |
| --------------------------------------- | ----------------------------- | ---------------------------- |
| LIC Commission (RCM) | Service tax paid by recipient | Yes |
| Mutual Fund Commission (Forward Charge) | Service tax paid by agent | Yes |

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So if total commission (LIC + Mutual Fund) exceeds Rs. 10 lakhs in a financial year, the agent **must register and pay service tax** (on applicable commissions).

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If you want, I can help with examples or calculation details!

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