In a move that could provide a big relief to a large number of mutual fund distributors, the GST council, headed by Finance Minister Nirmala Sitharaman, is likely to defer the implementation of reverse charge mechanism (RCM) until March 2020, said tax experts.
Tax experts told Cafemutual that distributors earning less than Rs.20 lakh a year are likely to avail RCM benefits until the government issues a notification to withdraw these benefits. “While the government has added three more services under the reverse charge mechanism net, it has not come out with notification on the deferment date. Typically, if there is no communication of withdrawal, such a benefit remains applicable,” said a tax expert requesting anonymity.
The expected deferment will benefit distributors earning less than Rs.20 lakh who do not have GST registration. 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.
Also, distributors who earn up to Rs.50 lakh and do not have any business with AMCs outside Maharashtra are eligible to pay lower GST rates of 6% under Composition Scheme.
For all other 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 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) had extended RCM benefits until June 2018 and then September 2019.
