AMFI has reportedly appointed PricewaterhouseCoopers (PwC) to prepare a whitepaper on the implementation of GST and its impact on the mutual fund industry, said three people familiar with the development.
Earlier, SEBI had reportedly asked AMFI to submit its whitepaper on the roadmap of the mutual fund industry to comply with GST.
There are many concerns on the implication of the new tax regime for the Rs.19 lakh crore mutual fund industry. One such concern is regarding the requirement of state specific registration and compliance. The GST Bill says that the service tax is to be paid at a place where it has been consumed. AMCs, insurers and distributors have investors spread across the country.
Divyesh Lapsiwala, Tax Partner, EY India believes that distributors having clientele from other locations will have to take multiple GST registration while a Mumbai-based tax consultant, ZM Kapasi feels that only AMCs will have to take multiple registration as distributors ultimately sell their products.
Kapasi, however, doubts if distributors can avail exemption benefit of Rs.20 lakh if they have business from multiple locations. “There is a grey area in the current GST Bill. According to the law, one cannot avail exemption limit of Rs.20 lakh if they have presence in multiple locations. That means, if a distributor based out of Mumbai sells scheme of Chennai-based fund house, they may not get the benefits of exemption. I think AMFI should seek clarity on this from the ministry.”
“The government has only confirmed the rate at which mutual funds will be taxed i.e. 18%. On the rest of issues like state specific registration, we have sought PwC’s view,” said a senior MF official requesting anonymity.
The government will implement GST from July 1, 2017.