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One of readers wrote to us with this query:
I am an individual mutual fund distributor. Recently, I received a communication from AMFI that my brokerage has exceeded Rs.20 lakh and I will have to obtain GST registration within a month’s time.
My son has cleared NISM examination and he will receive his ARN soon. I would like to understand if I can transfer some of my assets to my son to segregate my trail income and avail the benefits of GST exemption.
Name of the MFD has been withheld on request.
Dear MFD,
Thanks for writing to us.
Firstly, it is not recommended to transfer assets to get GST exemption.
In fact, AMFI norms do not allow MFDs to do partial transfer of assets. Remember that the existing distributor will have to transfer the entire assets.
Even if you transfer your entire assets to your son, the trail commission rate for the new distributor will be in line with the trail commission rate of old distributor.
In any case, you need to pay GST once you reach the threshold of Rs.20 lakh. However, you will have to pay GST only on the incremental income in the first year.
In future, you can cancel your GST registration if your income doesn’t exceed the threshold limit in the subsequent financial year. Overall, you can obtain and cancel GST registration multiple times.
Regards,
Team Cafemutual
