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  • MF News Relief to large distributors earning up to Rs.50 lakh, GST reduced to 6%

    Relief to large distributors earning up to Rs.50 lakh, GST reduced to 6%

    The exemption limit of Rs.40 lakh limit may not be applicable for financial intermediaries like mutual fund distributors.
    Nishant Patnaik Jan 11, 2019

    In a major relief to distributors who are earning up to Rs.50 lakh, the government has reduced GST rate from 18% to 6% with effect from April 1, 2019.

    Union Finance Minister Arun Jaitley has announced the introduction of composition schemes for services sector. So far, this scheme was applicable for manufacturers and traders.

    In a press release, it said, “A composition scheme shall be made available for suppliers of services or mixed suppliers with a tax rate of 6% (3%CGST + 3%SGST) having an annual turnover in the preceding financial year up to Rs.50 lakh. The said scheme shall be applicable to both service providers as well as suppliers of goods and services, who are not eligible for the presently available composition scheme for goods.”

    Since most distributors earning less than Rs.20 lakh have either cancelled their GST registration or not obtained any GST registration to avail benefits under reverse charge mechanism, the move would largely benefits distributors earnings between Rs.20 lakh and Rs.50 lakh.

    However, these distributors cannot avail input credits if they opt for the composition scheme. Also, they will have to pay taxes quarterly but file returns annually.

    On higher exemption threshold limit of Rs.40 lakh, tax experts said that this exemption is applicable for suppliers of goods, not services and hence, this threshold limit may not be applicable to financial intermediaries like independent financial advisors. Also, the discretion to increase this threshold limit is with states.

    Cafemutual has spoken to GST experts at consulting firms, compliance officials at AMCs and three chartered accountants to confirm this report. We intend to clarify your doubts on GST. This does not tantamount to be a tax advice of any nature or a recommendation. Please take advice from a qualified tax advisor for your guidance.

     

     

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    25 Comments
    Rajesh Kumar khattar · 5 years ago `
    Composition is not available for interstate GST(igst ) ,only applicable to with in state services (cgst+sgst )
    Divyesh · 5 years ago `
    Sir mutual fund distributors are under compulsory registration requirement u/s 24(vii) so no basic exemption of Rs. 20 lacs also.
    Divyesh · 5 years ago
    According to me yes
    Varun Vaid · 5 years ago
    It is for Commission Agents not applicable on MFDs.
    Divyesh · 5 years ago
    MFD are intermidiaries only and section says Acting as agent or otherwise. So for all borkers sub brokers mfd all will be covered
    Reply
    Ankush · 5 years ago `
    Means those who are earning even 5 lakhs income annually will have to take GST number now. Please clarify
    Divyesh · 5 years ago
    According to me yes. And it is not now. Its already they since beginning
    Reply
    Rajesh Badrinarayanji Sharma · 5 years ago `
    Before FM , major relief is already provided by SEBI on 22 Oct ... Na rahega bass Na bajegi basuri ....
    Aniruddha Rahalkar · 5 years ago `
    The above article is totally confusing. Not clear whether people earning between 20-40L got any get relief or not. Can you please clarify again?
    Sanjay · 5 years ago `
    If some one who is recently associated with national distributor like NJ, Prudent and barely earning anything will have to take GST number?
    Ankush · 5 years ago `
    Means those who are earning even 5 lakhs income annually will have to take GST number now. Please clarify
    KIRAN MEHRA · 5 years ago `
    In my opinion, composition dealer can't rendered interstate services, hence scheme is not available to them. It can benefit Maharastra distributors as all the AMC are in Bombay, hence eligible for the scheme. Further 40 lacs limit is also not applicable to Services. So these are not at all beneficial to distributors except as stated above
    Bharat Ghai · 5 years ago `
    What what about a small IFSC are associated with large broker houses will this helpful to them???
    bhavna · 5 years ago `
    Mr. Nishant please clarify on following:
    1. if composition scheme benefit is avaiable to all distributors who are in inter state.
    2. if increased exemption of 40 lakh is available to service providers.
    Manjeet singh · 5 years ago `
    There is so much ambiguity in interpreting the laws in India that one remains confused all the time.Why can't the experts give one view.It is always said pls. Consult your legal advisor and we are left in the lurch.
    Saurabh · 5 years ago `

    Composition is not available for interstate GST(igst ) ,only applicable to with in state services (cgst+sgst )

    Please clarify
    Sanjay · 5 years ago
    I think all financial products like insurance, mutual funds etc should be national products and not a product of any particular state because Head Office of any financial institution can be opened anywhere in India.
    Reply
    RAMAKANT MAHAWAR · 5 years ago `
    Clarity for MF Distributors on GST

    1. New exemption limit of INR 40 lakhs is NOT applicable to MF distributors. For them (or any service provider) limit will be SAME of INR 20 lakhs

    2. Composition scheme upto INR 50 lakhs WILL be applicable for MF distributors but only for those who are in Maharashtra.

    Composition scheme is that one enrols for GST but pays tax @6% (for service providers) instead of 18% of turnover and claims ZERO Input Tax Credit

    Composition scheme is only for intra-state.

    If the distributor has even one invoice outside eg: Mumbai distributor with only one MF like Sundaram MF outside Maharashtra and all others in Mumbai, then can't avail composition
    JAGJIT SINGH · 5 years ago
    Please give clarity for GST enrolled IFA earning less than 20 lakh commission in a year...can he file NIL quarterly returns
    Reply
    Divyesh P Sodha · 5 years ago `
    https://taxguru.in/goods-and-service-tax/gst-compliances-registration-requirements-brokers-mutual-fund-agents.html


    Go through the above article to have clarity
    Manu · 5 years ago
    The above article is general in nature and dated June 2018 it does not answer the question regarding the Rs 20 Lac exemption limit specified for all services by the GST Committee
    Reply
    Manu · 5 years ago `
    As confimred with the local GST officer those who are earning below Rs 20 Lacs are exmept and can file nil return until canellation of Registration is completed. However those earning above Rs 20 lacs but upto Rs 50 lacs are liable to file and pay GST of 6% .
    UMESH BHAMRI · 4 years ago
    HOW CAN WE TAKE BENIFIT FOR COMPOSITION SCHEME
    Reply
    Suresh lahoti · 4 years ago `
    Please help for the composition of GST, and how to inform to cams and AMC
    nishant · 2 years ago `
    Whether we have to pay gst in next financial year even though we earn less than 20 lacs if we have crossed 20 lac mark in previous year .
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