AMFI has requested finance ministry to simplify GST norms for the mutual fund industry and distributors, said three people familiar with the development.
Earlier in December, Union Minister of Finance and Corporate Affairs Arun Jaitley met representatives from banks and financial institutions in the pre-budget consultation meeting where NS Venkatesh, CEO, AMFI represented the mutual fund industry.
Among its key recommendations are extension of reverse charge mechanism beyond March 2018 and exemption for distributors from raising invoice. While MF distributors earning less than Rs.20 lakh are exempted from paying GST under reverse charge mechanism, distributors earning over Rs.20 lakh and have GST registration number are raising invoices on AMCs currently.
“AMCs do business with many distributors across the country. Hence, it is difficult to collect invoices from each distributors. This has increased cost of compliance for us,” said CEO of an emerging fund house. He said that AMFI has suggested to the ministry that commission statement generated by R&T agents can be used for compliance with GST invoice norms instead of invoices.
The other key recommendations are:
- Input credit on exit load: “Government levies GST on exit loads which is not a business income. Exit load is credited to scheme. Hence, we have suggested that the government should allow input credit on exit load GST,” said one of the officials quoted above.
- Branch offices should not be considered as separate entities: Since branch offices are the core part of AMCs business to carry out marketing and sales activities, they should not be considered as separate entities and the head office should be allowed to avail input credits accumulated from branch offices.