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The upcoming financial year brings a few rules that will have major impact on your business. We have listed top 4 changes that will matter to you most.
Strict ARN renewal rules
AMFI’s new ARN renewal norms will come into effect from April 1, 2022. These norms say that AMCs can give your clients to other distributors or simply shift their assets in direct plans if a distributor does not renew his ARN within 3 months of expiry of his ARN.
Further, if a distributor does not renew his ARN within 6 months of expiry, AMFI will permanently cancel his ARN. AMFI will not issue fresh ARN to such distributors again.
So far, AMFI norms did not stipulate any timeline to renew the ARN. However, if you renew your ARN later than six months from the date of expiry, AMCs will forfeit or write off your trail commission. Once you renew your ARN, you will continue to get trail commission on your previous assets i.e. assets that you built before the expiry of your ARN.
ARN Validity
The last date of validity of ARNs expiring during the pandemic i.e. between March 15, 2020 and March 31, 2022 is April 1, 2022. That means, if MFDs did not renew their ARN before April 1, 2022, it will no longer be in active status. Please note that NISM may not give any further extension to ARN holders on validity.
PAN and Aadhaar linking
Your clients cannot invest their money in mutual funds either through lumpsum or SIPs if they do not link PAN and Aadhaar. You should urge your clients to link PAN and Aadhaar on or before March 31, 2022. If they face difficulty in doing so, you may extent your support to avoid business disruption.
Crypto/NFT tax
Tell your clients to sell their cryptocurrency holdings as soon as possible to save on taxes.
In the Budget 2022, government has proposed to impose 30% tax on gains made through investments in digital assets like cryptocurrencies and non-fungible tokens (NFTs). The new rule will come into effect on April 1. If the investment is sold by March 31, the gains will be taxed as per the income tax rate applicable on the investor.
