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Forums New Developments GST compliances and registration requirements to Sub Brokers / Mutual Fund Agents:

GST compliances and registration requirements to Sub Brokers / Mutual Fund Agents:

by CA Divyesh Sodha Jun 29, 2018
There are views prevailing regarding no requirement of GST registration or compliances by Share Sub Brokers / Mutual Fund Agents. While the same is not correct on the following grounds:

24. Compulsory registration in certain cases

(1) Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act, ––

(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise;

Accordingly any person acting as an intermediary requires compulsory registration under the above referred provision. And once a person is registered under GST he is required to make all the compliances including collection and payment of GST.
Further recently CBIC released FAQs on Banking and Financial Service sectors. The question No. 83 of the same reproduced herein below:


Would sub-brokers/ Authorized Persons fall in the definition of “agent” under Section 2(5) of the CGST Act, 2017? What would be the registration requirement for subbrokers / Authorized Persons in the context of the Goods and Services Tax Regime?


As per Stock Brokers and Sub Brokers Regulation, 1992 issued by SEBI, a “sub broker” means “any person, not being a member of stock exchange, who acts on behalf of a stock broker as an agent or otherwise for assisting the investors in buying, selling or dealing in securities through such stock brokers”. It is, therefore, apparent that the sub broker may not only be providing services to the stock broker but may also be providing services to the clients and receiving consideration from both. Thus, in such a scenario where the sub broker is providing services both to the broker and the investor on behalf of the broker, he would be duly covered by the definition of ”agent” as provided in Section 2(5) of the CGST Act, and needs to compulsorily register without the threshold under Section 24(vii) of the CGST Act, 2017.

The above makes it clear that any person acting as such intermediary by whatever name called requires compulsory registration and requires to make all the compliances under GST.
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