MF News AMFI urges MF distributors to update GST identification number

AMFI urges MF distributors to update GST identification number

AMCs will deduct commission of unregistered distributors from this month.

Nishant Patnaik Jul 31, 2017

AMFI has urged mutual fund distributors to upload their GST identification number on CAMS.

In an email communication sent to distributors, AMFI has clarified that AMCs will deduct GST from commission of unregistered distributors. “In case you have not yet submitted your GSTIN so far, you are requested to do so at the earliest in order to avoid your commissions for the month of July 2017 being subject to Reverse Charge Mechanism (RCM).”

AMFI further said, “If a distributor does not register under GST, and submit their GSTIN, they are considered as 'Unregistered person'. Consequently, the MF/AMC receiving the supply of services from an unregistered distributor shall be liable to pay GST to the government on every payment made to the unregistered distributor under 'Reverse Charge Mechanism.”

Distributors earning over Rs.20 lakh a year have to take GST registration. The limit is Rs.10 lakh for distributors from special states comprising Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.

Apart from distributors earning over Rs20 lakh, distributors selling schemes of a fund that is based outside his/her home state will have to take a GST registration number. Suppose, a Chennai based distributor is selling the schemes of a Mumbai based fund house, he or she will have to take a GST registration. Since most AMCs work out of Maharashtra, distributors based in other states will have to obtain their GST registration.

Who stands exempted then? For example, Maharashtra-based distributors, earning less than Rs.20 lakh and dealing only with Maharashtra-based AMCs, need not take GST registration, but unlike service tax, GST has to be paid from Re.1 onwards. Hence, IFAs are better off taking their GST registration number – they will not only get gross commission irrespective of their income, they can also save some amount through input credit.

Distributors need to file an online application form on the GST registration portal and key in details of PAN, email id and mobile number. Once the platform verifies these three details, you will have to key in details of your distribution business. You can upload the application form online by attaching scanned copies of your documents. You will get your GST registration within three working days.

Distributors who already obtained GST registration and want to get gross commission can send an email for their registered email id to amfigst@camsonline.com with details of the GST number. They will also have to attach scanned copies of GST registration certificates.

Distributors can register on their own through AMFI’s website. Distributors will have to key in their ARN code and PAN details. An OTP will generate to the registered mobile number and email address. The distributor will be required to update state-wise GSTN numbers and upload the registration certificate images.

Like what you are reading?

Login to get instant access to this article and many other such articles on business development, success stories and industry updates.

Don't worry ... it's FREE!

Have a query or a doubt?
Need a clarification or more information on an issue?
Cafemutual welcomes all mutual fund and insurance related questions. So write in to us at newsdesk@cafemutual.com

Latest Articles

Debt funds that performed well in one year

Name mismatch in PAN and MF Folio will not affect transaction of existing investors

SEBI to introduce new supervisory body to regulate RAs and IAs

Nomination no longer required in joint MF holding: SEBI

Appointment of fund managers for gold/silver ETFs not mandatory: SEBI

Your bulletin for the day

HDFC MF, ICICI Prudential MF and SBI MF command highest individual AUM

‘Mid cap stocks tend to perform well when the economy is growing quickly’

Trust MF collects over Rs.500 crore during the NFO of its first equity fund

‘Passives are inevitable and in Virat Swarup’

Click to clap

Disclaimer: Cafemutual is an industry platform of mutual fund professionals. Our visitors are requested to maintain the decorum of the platform when expressing their thoughts and commenting on articles. Viewers are advised to refrain from making defamatory allegations against individuals. Those making abusive language or defamatory allegations will be blocked from accessing the web site.

24 Comments

Vivek · 6 years ago `

Sundaram, a Chennai based AMC has now registered in Maharashtra, hence for Maharashtra based Distributors it is not mandatory register for GST if it's only because of Sundaram.

Also, if GST is a pass thru tax, why are the AMCs not passing it on to the Investors in the expense ratio, anyways the expense ratios of Direct and Regular are different and the Regular Plans factor the brokerage paid the distributors? Even the regulator is silent on this matter.

Integrated Money Matters Pvt. Ltd. · 6 years ago `

If we do not take the GST Registration, commission will be disbursed after deducting GST under Reverse Charge Mechanism. Such distributors will be away from the hassle the filing returns and a little loss in the form of INPUT CREDITs. Let us look at the comments of more experienced, but small distributors !

Trideep Kumar Borah · 6 years ago

I am a small distributor, who work part time advisory. presently working in State Govt. Service. My last year commission was just Rs 74000/- After consultation and giving a thought, for me Reverse Charge mechanism for commission distribution is OK for me. Other wise I have to file monthly the GST returns and make invoice for the respective AMC.

S.VENKATARAMAN · 6 years ago `

I am based at Tamilnadu and earning less than 20 lacs per Annum. If I don"t provide GST Number AMC will deduct 18% and pay the balance. If I provide GST AMC will not deduct and in turn I will take input credit . According to me Mobile bill, Hotel bill and land line bill I can take input credit for the CGST I pay which will be very minimal say only less than Rs 600 per month. In that case why shouldI I break my heads filing gst everymonth?. Let the AMC deduct and pay , I will be free from filing Head ache.

S.VENKATRAMAN · 6 years ago `

ALL AMC have offices in most of the cities. If AMC take GST number Statewise like sundaram AMC has registered at Maharashtra . Small IFA will be benefited. No IFA forum and AMC take this seriously. I dont know why?

L. ASHOK · 6 years ago `

I also feel reverse charge mechanism is the best one for the IFAs who are doing only mutual funds and from B15 cities, because practically they don't have much from the input credit comparing with filing returns, if my say is wrong please clarify .

Vivek · 6 years ago

Your Brokerage will come after deduction of 18% GST, will be less by GST amt as compared to your last payout.

Mangesh · 6 years ago

Yes,but if you register, the 18% GST amount, which is not deducted by AMC, needs to be deposited to govt.as GST, by IFA. If AMC is paying say 100+18=118/- , and asking IFA to deposit GST amt, it makes sense, when non registered IFA will get 100-18= 82/-. If it so, then 100% IFA's will do registration. But unfortunately all AMC's, AMFI, SEBI, GST council, are keeping mum.I don' t know why.

Kush · 6 years ago `

Greetings everyone
Why are the AMCs going to deduct GST paid on reverse charge mechanism basis from the distributor's commissions when they shall be eligible to take credit for the same

The AMCs are liable to pay GST from their own pockets u/s 9(4) of the CGST Act, 2017 and shall be eligible for receiving input credit for the same

As such, fairness dictates that they should not deduct anything from our commissions as they can take input credit benefit of equal amount

Vivek · 6 years ago

Agreed

Devender Bajpai · 6 years ago `

I don't understand why AMC will deduct the GST from our gross commission , this is against the law because GST is the Indirect tax & it has to born by the service recipient ( AMC ) , we are IFA'S are service provider but by deducting the Same from our gross commission this will be treated as DIRECT TAX , we should approach the finance minister or GST council to get the clarification

Dweepesh · 6 years ago `

Respected AMFI
My commission last year was 2,00,000 only . Is it worth to get GST Number ?
Kindly suggest .
Thanks

Trideep Kumar Borah · 6 years ago `

I am working under State Government service. I do not part time advisory. My last year commission was only Rs. 74000/- I don't feel like registering and every month do the filing for GST. It is better the GST be deducted under Reverse Charge mechanism. Since I get commission from 9 of the AMCs, some commission less than Rs 500/ a month. For filing GST one has to create invoice for the respective AMC, Now if I get registered, then every month I have to create invoice for the 9 AMC, it is delayed then you have to pay fine. And I I don't think I can get benefit from Input Tax credit. Hence better the commission be paid through reverse charge mechanism

Ansel Pereira · 6 years ago `

AMFI & AMCs are silent on the issue of GST registration by small distributor for their own benefit. They have misinterpreted the GST law from their point of view. All the employees & CEOs are providing services to the AMC But GST will not be deducted from their salary. Because they are salaried employee. Therefore GST is not applicable to them. If a ordinary employee drawing a salary of Rs. 5 lac per annually, Rs 2500/- will be deducted from his salary as profession tax. But Rs. 90000/- will be deducted towards GST from the broker's commission if he earns Rs. 5 lac annual commission. How fare is it? GST is direct tax or indirect tax? Will the AMFI & AMC's professionals tolerate such indiscretion? Check your own conscious. Let us sell mutual funds happily.

Lalwani · 6 years ago `

It is open fact that most of Individual Mutual Fund Distributors (More than 95%) are earning less than Rs 100000/- Per Annum and they are supplementing other activities in order to meet the living expenses. Inspite of supplementing other income , their total earnings in most of cases are not more than 200000/- Per Annum. Morever they are having local Investors whom they serve and they deal with local branches of AMC's, So where is the question of dealing with other state entities. Distributors are not directly dealing with AMC Head offices. When they are not dealing with AMC Head offices then where is the question of getting Registration under GST on the ground of other state dealings. All the AMC Branches are registered under local bodies. So they should get themselves registered under GST Act.
As AMC offices are receiving services of Distributors, they according to Law have to bear the GST.
It is against the spirit of GST Act to force Distributors earning less than 20,00,000/- to get themselves registered under GST.
As the calculations of commission are carried out at AMC level, they have all the data about commission earned by Individual Distributors. They should disclose the number of Distributors earning more than Rs 20,00.000/- or at least less than Rs 2,00000/- so that we can reduce the burden of filling return in the GST System and reduce the burden of GST system by feeding unnecessary data.
Finance Ministry and other legal experts should Express their views on the above observations for the benefit of Mutual Fund Industry and Distributors.

Nishikant · 6 years ago `

GST is to be borne by the end user. In Every Sector & Industry it is borne by the customer. SEBI is not in favour to pass the GST to MF unit holders as it will increase the TER by few basis points.

So, naturally GST has to bear by the entities which are providing services to MF investors.

But the million dollar question is,

" IS MF Distributor is the only entity which is providing services to MF investors ???? "

AMC, Registrars & thier employees they all are also providing services to MF investors.

Then, why only the Distributors brokerage is taxed at 18% form Rupee 1.

Why AMC, Registrars are spared from GST ?

Is it not Unfair, Undemocratic, injustice & against the law of the land.

Small distributors income of few lacs is taxed at 18% from Rupee 1 while AMCs which are making profits of hundreds of crore is spared from the tax.

Why SEBI, AMC, AMFI & PWC forcing Small Distributors to pay entire 18% GST when 95% MFDs don't have a income of even 20 lacs.

MF Distributors who are in 30% Income tax bracket has to pay 30% Income Tax + 18% GST from rupee 1.
So, it comes out to be 48% tax on the income. is it the new TAX Terrorism ??

Satish Naik · 6 years ago `

Prior to GST, provision was that if, the MFA falls in the preview of Service Tax (i.e. commission / brokerage income exceeding Rs.10/- lacs P.A. ) the liability for paying service tax was shouldered on the MFA and AMC were relieved for Service Tax payment.

Like the same way for GST can't be implemented?

In MF industry so many (95%) of MFA's are earning a commission/brokerage income of less then Rs.10/= lac per annum.

OR.

MFA's be allowed to submit self declaration for the commission / brokerage income having less then Rs.20/- lac (as prescribed in the GST - Act) for the each financial year for receiving remuneration without deduction of GST from AMCs.

Mukesh Adani · 6 years ago `

All things are showing that regulator wants to reduce Mutual fund business through Distributor. According to Indian consumer behaviour mutual fund business can't possible without distributor in coming 10 years. If regular till not understand the real fact, the business will slow down in coming year. lots of customer will missed out the opportunity. mostly the under develop place. Bank can't fullfil the requirement. MUTUAL FUND SAHI HAY. it is good but KIUN SAHI HAY. answer is not possible without face to face introduction. fees base structure is good but Awarness level will not support the structure for a decade. I confirm that if the coming flow will happen more than 10 years most of the fund could not manage the subscription. there are no redemption process without customet consent. what will happen lets see. is regulator thinking anything else. Market will give the right answer.

Rajesh Parekh · 6 years ago `

Why 18% GST only on mf distributor why not to insurance agents.?

Gajanan Yadav · 6 years ago `

GST subject is not clear to Mutual Fund Distributors at all. SEBI and AMFI and other associations should take necessary steps to save poor distributors plea. Distributors are backbone of MF industry and paralysing with GST arm is not fair. As per law below Rs.20 Lakhs commission or brokerages , GST should not to be enforced . If it is made compulsory then distributor instead of meeting to investors , every month he will be in Que for filing his GST returns to save his code. Hoping some good results and decisions from authorities.

vishwasrao patil · 6 years ago `

It is injustice with small MFs distributor They shall be collapsed before standing as their income under Rs.1or 1.5 lakh. No one can take interest in distributorship because of heavy tax deduction. So plz help the said distributors to share to make saksham Bharat

ANIL KUMAR · 6 years ago `

NOT A SINGLE AMC IS HELPING OUT TO HELP DISTRIBUTORS ... IN THE TECHNICAL ISSUES OF GST REGISTRATION

ANIL KUMAR · 6 years ago `

PLEASE SAVE SMALL DISTRITUTORS.... THEY WILL SHUT THEIR BUSINESS DUE TO CONFUSING GST AND HEAVY TAXATION

Nilesh · 6 years ago `

If small distributor and earn less than 20,00,000 and not registered under GST he/she come in to 10% tax slab and now he or she pay tax 28%.
This is unfair AMC,AMFI,SEBI and GST council need to clarify this issue as soon as possible.
And protect from this loot for small distributors.

More than 2,07,000 of your industry peers are staying on top of their game by receiving daily tips, ideas and articles on growth strategies. Join them and stay updated by subscribing to Cafemutual newsletters.

Fill in the below details or write to newsdesk@cafemutual.com and subscribe to Cafemutual Newsletter now.

POLL

MORE POLLS

AMCs can pay trail commission to the new distributor if investors initiate transfer of their assets. How will this impact you?

Help me get clients of other distributors who are underserved

Lead to poaching of clients

No significant effect on my business

EVENTS FORUMS