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  • MF News AMFI seeks PwC help to navigate the GST waters

    AMFI seeks PwC help to navigate the GST waters

    SEBI had asked AMFI to submit whitepaper on the implementation of GST.
    Nishant Patnaik Jun 13, 2017

    AMFI has reportedly appointed PricewaterhouseCoopers (PwC) to prepare a whitepaper on the implementation of GST and its impact on the mutual fund industry, said three people familiar with the development.

    Earlier, SEBI had reportedly asked AMFI to submit its whitepaper on the roadmap of the mutual fund industry to comply with GST.

    There are many concerns on the implication of the new tax regime for the Rs.19 lakh crore mutual fund industry. One such concern is regarding the requirement of state specific registration and compliance. The GST Bill says that the service tax is to be paid at a place where it has been consumed. AMCs, insurers and distributors have investors spread across the country.

    Divyesh Lapsiwala, Tax Partner, EY India believes that distributors having clientele from other locations will have to take multiple GST registration while a Mumbai-based tax consultant, ZM Kapasi feels that only AMCs will have to take multiple registration as distributors ultimately sell their products.

    Kapasi, however, doubts if distributors can avail exemption benefit of Rs.20 lakh if they have business from multiple locations. “There is a grey area in the current GST Bill. According to the law, one cannot avail exemption limit of Rs.20 lakh if they have presence in multiple locations. That means, if a distributor based out of Mumbai sells scheme of Chennai-based fund house, they may not get the benefits of exemption. I think AMFI should seek clarity on this from the ministry.”

    “The government has only confirmed the rate at which mutual funds will be taxed i.e. 18%. On the rest of issues like state specific registration, we have sought PwC’s view,” said a senior MF official requesting anonymity.

    The government will implement GST from July 1, 2017.

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    4 Comments
    Raghav Aggarwal · 6 years ago `
    This is serious and to be addressed on urgent basis because it is impossible for small IFAs to have such a infrastructure for GST
    Manoj · 6 years ago
    1000% correct
    Reply
    Sanjay Sondhi · 6 years ago `
    1. Multiple state registrations and manifold rise in number of returns to be filed ( 3 or 4 a month as against just 2 a year at present ) is against governments stated objective of promoting ease of doing business. 2. MF brokerage should also become taxable on receipt basis instead of on accrual basis due to inherent nature of calculation and release of such brokerage. Tax authorities should realise that MF distributor can not on his own, raise invoice for brokerage but bases his invoice upon payments actually released by the MF.
    lovey Mehra · 6 years ago `
    The exemption limit of 20lacs is indirectly taken away under the GST from all financial product intermediaries . Moreover even a reverse charge taxation would not free the small and big distributors from registration under GST as there is another caluse in the GST PPT on cbec site which mandates that even person from whom reverse charge is charged has to register under GST. Small distributors cannot definately afford this multiple state registration n cumbersome process n cost. The Distributors should ideally be made exempt for GST taxation n be liable only for income tax and the government can collect tax through only limited number of AMC/MF instead lakhs of distributors. This amount maybe charged to the scheme in addition to the TER after all ultimately customer is the ultimate user of services. This would be in line with the concept of GST where tax is to be paid by the ultimate consumer and in a simplified process. This would even ease the governments revenue collection and avoid catastrophic confusion which it would otherwise create.
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