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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 10, 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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22 Comments
Rajesh Kumar khattar · 2 months ago
Composition is not available for interstate GST(igst ) ,only applicable to with in state services (cgst+sgst )
Divyesh · 2 months ago
Sir mutual fund distributors are under compulsory registration requirement u/s 24(vii) so no basic exemption of Rs. 20 lacs also.
Divyesh · 2 months ago
According to me yes
Varun Vaid · 2 months ago
It is for Commission Agents not applicable on MFDs.
Divyesh · 2 months 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 · 2 months ago
Means those who are earning even 5 lakhs income annually will have to take GST number now. Please clarify
Divyesh · 2 months ago
According to me yes. And it is not now. Its already they since beginning
Reply
Rajesh Badrinarayanji Sharma · 2 months ago
Before FM , major relief is already provided by SEBI on 22 Oct ... Na rahega bass Na bajegi basuri ....
Aniruddha Rahalkar · 2 months 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 · 2 months 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 · 2 months ago
Means those who are earning even 5 lakhs income annually will have to take GST number now. Please clarify
KIRAN MEHRA · 2 months 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 · 2 months ago
What what about a small IFSC are associated with large broker houses will this helpful to them???
bhavna · 2 months 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 · 2 months 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 · 2 months ago

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

Please clarify
Sanjay · 2 months 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 · 2 months 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 · 2 months 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 · 2 months 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 · 2 months 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 · 2 months 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% .
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