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GST to be payable to distributor by AMC on and above brokerage amount

by SUNIL LALGE Aug 31, 2017
My IFA friends I have sent e mail to AMFI as below, who ever agree to my opinion, please send mail from your end also.

Respected sir,

SUB: GST clarification



I am AMHI registered Mutual fund distributor having ARN 84264 Sunil L Lalge With GSTIN 29ADDPL1907H1ZN.

I am happy to see AMFI is implementing GST law very firmly. It has given GST FAQ on its site.

I am finding some doubts in its implementation.

Some of my understanding on GST ( in short)

1. Any person supplying Goods and services should register to GST law. Who are doing business only intrastate can have option for not registration up to Rs 20 lakhs of turnover for goods / 20 lakhs income for services. For businesses having inter-state transactions they must register to GST irrespective of their turnover / income.

2. Any entity registered to GST, should collect GST on their transaction value from their client and paid to government by process of GST return filing. If their transaction is intra-state they should collect SGST and CGST to be paid government. In our case (Mutual fund distributor) GST rate is 18% they should collect SGST 9% and CGST 9% and to be paid to Govt). If transaction is inter-state then they should collect IGST 18% and paid to govt.

3. If Distributor is not registered to GST then AMC should pay GST on behalf of Distributor to Govt under reverse charge mechanism (RCM). AMC is not eligible to take ITC (Input tax credit), That is considered as their supply(sale). So Distributor is penalized as they are not in GSTN network.

4. If distributor is also registered to GST then AMC should pay the GST to registered distributor on his brokerage amount. Distributor will in turn pay the GST collected to Govt by the process of GST return filing. AMC is eligible to take this paid GST as their ITC( Input tax credit) as that is tax paid on business expenses . So AMC and Distributor both are benefitted as they under GSTN networks

As I have received the brokerage for the month of JULY services, No AMC are paid GST on my brokerage. I am expecting all AMC are to be paid GST on my brokerage amount.

Please clarify me why AMC are not paid GST on brokerage to me. As all AMC offices at my city are telling that this stand is taken at AMFI level.

I am expecting valuable reply from you.

SUNIL LAXMAN LALGE
Cafemutual welcomes your comments. Any disagreements or criticisms must be expressed in a dignified manner. Thank you.
3 Comments
CA Divyesh Sodha · 8 months ago

First of all if AMC pays GST on RCM basis (now RCM is not applicable till March 18) then they can definitely take credit of the same. So AMC should pay full amount of Brokerage and should not deduct GST from your brokerage amount.
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