In a major relief to mutual fund distributors, the government has deferred the implementation of reverse charge mechanism (RCM) by another one year i.e. from September 30, 2018 to September 30, 2019.
Earlier, the GST council, headed by Finance Minister Arun Jaitley, has recommended the government to defer the implementation of reverse charge mechanism (RCM), said tax experts.
The move will benefit mutual fund distributors, who do not have a GST registration number, and those who have surrendered their GST registration number. These distributors should, however, have earnings of less than Rs.20 lakh a year.
For distributors with GST registration, AMCs continue to follow forward charge mechanism, i.e., AMCs will pay the gross commission to them. These distributors can avail of the benefits of input credit.
In case you are earning less than Rs.20 lakh, but have GST registration, you can cancel your GST registration by visiting this link https://services.gst.gov.in/services/login.
Earlier in October 2017, the GST council has first introduced RCM to benefit small businesses until March 2018. Later, the Central Board of Indirect Tax and Custom (CBIC) has extended RCM benefits until June 2018 and then September 2018.
