In a major relief to mutual fund distributors, the government has deferred the implementation of reverse charge mechanism (RCM) till September 30, 2019.
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 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.
Earlier this month, the government introduced composition schemes for services sector. Under the scheme, service providers earning up to Rs.50 lakh could pay GST rate of 6% instead of 18% with effect from April 1, 2019. However, these service providers cannot avail input credits if they opt for the composition scheme. Also, they will have to pay taxes quarterly but file returns annually. Moreover, the composition scheme in the current form does not allow service providers to avail benefits if they have interstate services.
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.
The GST council has first introduced RCM to benefit small businesses in October 2017.
