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One of our readers wrote to us with this query:
I am a distributor having regular GST registration number. I have been paying GST on time but I don’t raise invoices. My CA and other MFDs say that if I keep paying GST on time, I will not be required to raise an invoice. I want to understand if I am on the right track? Also, if I have to raise an invoice, do I need to send it to AMCs?
Name withheld on request
Dear MFD,
Raising invoice is one of the major compliance of having a GST registration number. According to the GST norms, all tax payers including mutual fund distributors and insurance agents will have to raise invoice before paying GST.
Paying GST on time doesn’t mean that the tax authority will not come to your registered office for verification of documents and to check for other non-compliances.
In case of non-compliance, the GST commissioner can levy a penalty on MFDs according to section 73 and 74 of the GST regulations. While section 73 is tax not paid due to lack of awareness, section 74 is wilful default.
MFDs can raise their GST invoice using their service code 997152. MFDs can use external help like from RTAs to raise the invoice but it is advisable to raise the invoice on your own to be more aware of the compliance process.
The GST invoice requires details like name, address, principle place of business, GST number of the distributor and the AMC, GST name of the MFD and the AMC, place of supply, details of various tax components like IGST and SGST and signature in case of a physical invoice.
Apart from invoicing, MFDs are also required to maintain a book of accounts with details of commission, expenses, bank accounts. Distributors will have to maintain this book of accounts in an electronic form with required backup at their principal place of business. These records have to be maintained for a period of 6 years in a machine-readable format.
MFDs should consider appointing a compliance officer to take care of all their GST compliance to maintain their focus on growing their business.
On second part, you will have to raise invoice against brokerage payment on AMCs. However, you are not required to send it to AMCs and will have to keep it with yourself for at least 6 years.
