One of readers wrote to us with this query:
Can you please clarify if the recent GST exemption on annual income of Rs.40 lakh applicable for MF distributors. If yes, let me know how I can avail this exemption.
Bikash Agarwal, Hexagon Broking, Bhubaneswar.
Dear Bikash,
A few days back, the ministry of finance tweeted about developments in goods and services (GST) tax. However, the series of tweets has created confusion in the MF distribution community about applicability of Rs.40 lakh GST exemption on their business.
MFDs want to understand whether they qualify to claim GST exemption if they earn up to Rs.40 lakh. In addition, if Maharashtra MFDs earning up to Rs.1.50 crore per annum can opt for lower GST rate of 1% under GST composition scheme.
However, both these relaxations are not applicable for individuals who work in services sector, which includes MFDs. Also, there is nothing new in this as these relaxations have been around for a while now.
Currently, the government has exempted distributors irrespective of location earning up to Rs.20 lakh from paying GST offering both intrastate and interstate services. So if you earn commission less than Rs.20 lakh a year, you are exempted from paying GST.
Ensure that you include commission from other financial products to arrive at your annual income. GST norms include commission income from all financial products such as stock broking and mutual funds to arrive at your annual income.
On GST Composition Scheme, currently, only a fraction of Maharashtra distributors who do not have business with AMCs beyond the state and earn between Rs.20 lakh and Rs.50 lakh can avail of the benefits of this scheme. The Composition Scheme allows MFDs earning up to Rs.50 lakh to pay GST rate of 6% instead of 18%.
