MF News Government to penalise distributors for not obtaining GST registration

Government to penalise distributors for not obtaining GST registration

Distributors earning over Rs20 lakh a year, or selling schemes of fund houses based outside the home state, will have to take GST registration by July 30, 2017.

Nishant Patnaik Jul 18, 2017

The Finance Ministry has clarified that a person who fails to take GST registration before July 31 will face penal action. This means, distributors earning over Rs20 lakh a year will now have to take GST registration by July 30, 2017 to avoid penal action.

The limit is Rs10 lakh for distributors from special states. Special category states comprise Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.

In a statement, the finance ministry said, “As per GST laws, one is required to take registration on or before July 30, 2017. All traders are requested to register now without waiting for the last date. If one is carrying out any business and has an annual aggregate turnover in the preceding Financial Year exceeding Rs20 lakh (Rs10 lakh in special category states), you need to register in all the states/union territories from where you are making taxable supplies.”

Apart from distributors earning over Rs20 lakh, distributors selling schemes of a fund that is based outside his/her home state will have to take a GST registration number. Suppose, a Chennai based distributor is selling the schemes of a Mumbai based fund house, he or she will have to take a GST registration. Since most AMCs work out of Maharashtra, Gujarat and Tamil Nadu, distributors based in other states will have to obtain their GST registration.

Who stands exempted then? For example, Maharashtra-based distributors, earning less than Rs20 lakh and dealing only with Maharashtra-based AMCs, need not take GST registration, but unlike service tax, GST has to be paid from Re1 onwards. Hence, IFAs are better off taking their GST registration number – they will not only get gross commission irrespective of their income, they can also save some amount through input credit.

Distributors need to file an online application form on the GST registration portal by clicking here and key in details of PAN, email id and mobile number. Once the platform verifies these three details, you will have to key in details of your distribution business. You can upload the application form online by attaching scanned copies of your documents. You will get your GST registration within three working days.

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27 Comments

Mangesh · 7 years ago `

Can some one clarify on following.
1. I am a proprietor and have a technical consultancy on " XXX consultant "with less than 20 lacs turnover annually, but still I have registered myself for GSTN, and received number also.
2. I am a Mutual fund distributor too and operating as a individual, can the same GST no. on XXX consultant will be used for MF business since PAN is same.
3. If I need to register for MF business separately, then what should I mention in " Constitution of business" and which proof needs to be attached, ( I am working as a Individual )

Kindly clarify.

Yogendra Karmali · 7 years ago

Under one Pan, you will be alloted only One GSTIN number. The same can be used for Brokerage from mutual funds under Business Auxiliary Services and for consultancy under Management consultancy services. Different bills will have to be issued to Amc and your clients whom you charge consultancy fees. Both the services will be subject to 18% GST. You will have to specify constitution as Proprietorship and also give the name of your consultancy firm under Trade Name while registration

Chandravadan J Prikh · 7 years ago

I am 70 yrs old, my total income from commission, is 2.5 to 3.0 Lakhs,I do not want to go for GSTIN, and if I want to surrender or stop the bussiness from today, May I stop,if yes what is procedure,i f No means I have to take GSTIN, M I RIGHR? If possible,PLEASE THROW LIGHT ON MY ISSUE. On my e mail ID

R.Vivek · 7 years ago `

GST Liability is on Buyer/Receiver of Goods & Services.

As Per GST law :

1. Distributor is supplier of service.

2. AMC is receiver of Service.

3. For Distributor,it is outward supply.

4. For AMC,it is inward supply.

5. GST paid on Inward supply is eligible for Input Tax Credit.

6. AMCs can take ITC for GST paid on Brokerage against GST collected on Fund Management charge.

7.Supplier will raise Tax Invoice mentioning value of supply/ service + GST
So, if Commission is 100 then Tax Invoice will be 100 + 18 = 118.

8. AMCs will pay 118 to distributor , 100 for brokerage and 18 for GST.

Shailendra · 7 years ago `

Dear mr vivek, AMC says Rs100 is inclusive of 18% GST so they will pay only 100 & not 118

R.Vivek · 7 years ago

Yes, they are asking us to raise Tax Invoice as 84.75 + 15.25 = 100.

As supplier of goods charges for value of goods + GST, Distributor is a supplier of service (money) to AMC, so we will raise TAX INVOICE for value of service + GST.

Whether we bear the GST or AMC bears, the AMC will surely avail Input tax credit benefit on GST paid on Tax Invoice raised by Distributors.So literally they should bear.

Prabhat Sahoo · 7 years ago `

Hi, I am a mutual fund distributor with income less than 10 Lacs. And I am based out in Cuttack, Odisha. If I am not registering for GSTIN then what will happen, is there any penal action for the same ???

Prashant · 7 years ago `

So AMCs are bringing our brokerage down further by misusing GST norms. Ideally we should get 118% which is true for any and all businesses. AMCs benefit from our GST input credit as well and their input credit as well. We need to protest against this practise.

R.Vivek · 7 years ago

Finance minister has clearly mentioned that the liability of GST falls on Buyer / receiver of Goods / Services.

18% GST is a significant amount for small distributors who even do not fall under basic IT slab.

Meet Sugat · 7 years ago `

Where is Hdfc registered ? In Maharashtra ?

Sunil Gupta · 7 years ago `

Hi,

What will be the GST liability on sub brokers whose earnings are less than 20 lacs a year.

Will the main broker pay GST at his end and then pay the brokerage or will it be paid by the sub broker.

And does the sub broker needs to get a GST no if he gets commission of less than 20 lacs a year.

VINAYAK GARKHEDKAR · 7 years ago `

Please inform names of the AMCs which are located outside Maharashtra.

K Rangarajan · 7 years ago `

Can some one clarify whether the exemption limit of Rs.20 lakhs will be applicable afresh, after migrating from the service tax registration to gst registration. Earlier the limit under service tax was Rs.10 lakhs which has been availed by the distributor but now after implementation of GST, whethere the fresh limit of Rs.20 lakhs will be counted from July 1 2017.

G.M.Mustafi · 7 years ago `

As per GST law up to 20 lakhs no GST on Maharashtra base MF Distributors. Other than Maharashtra base MF Distributors have to take gst registration who's earning re 1.I can't understand isThe honorable FM think all MF Distributors rest of India are enemy of the country. We bring business for AMC.Govt. get tax from AMC .
I think we should be United and protest against GST on mutual funds commission up to Rs 20 lakh.

Sanjay shah · 7 years ago

Gst on mutual fund brokerage is on reverse change Pl clarify

Trideep Kumar Borah · 7 years ago `

I am a IFA from Guwahati, earning less than 3 lakhs per Annum, My question is If I register for GST, I am empanelled with 13 AMCs, presently getting brokerage from 9 AMCs, as i am doing business for those AMCs, some of the AMC commission are less than Rs 500/- as less business, only the trail. The question is every month I have to give invoice for the 9 AMCs which I am doing business. which is a tedious process. Is there any simplified form for raising the invoice every month. or better to get the commission on Reverse Charge Mechanism

yogesh shah · 7 years ago `

As basically I am Life & General Insurance Agent.Annual income out of these 2 Insurance segment my annual income is more than 20 Lacs (Gross).But after deducting expenses & deduction allowed under different sections it comes near 12/13 Lacs.So for 20 Lac limit attracting GST WHICH INCOME SHOULD be count.Gross income or Nett income.1 more thing that I have started Mutual Fund distribution business recently.Recently I have taken ARN Code.And from this business I earn hardly 2 Lac P.A.So for 20 Lac limit my Insurance income also should be clubed or only MF distribution Income will be counted.
Please reply if any body can guide me.

Himanshu Rastogi · 7 years ago `

Being a sub broker income is below 10 lac and getting .I also enrolled with Uti MF having brokerage from their.Guide me registration is required.

Himanshu Rastogi · 7 years ago `

Being a sub broker income is below 10 lac and getting .I also enrolled with Uti MF having brokerage from their.Guide me registration is required.

amit shah · 7 years ago `

I THINK - IFA - (Supplier) will raise Tax Invoice mentioning value of supply/ service + GST
So, if Commission is 100 then Tax Invoice will be 100 + 18 = 118.

AMCs will pay 118 to distributor , 100 for brokerage and 18 for GST.

devendra khandelwal · 7 years ago `

it is difficult to understand why small ifas are being penalised.why 20.00lacs exemption limit is not been affected.gst is making same profession differently.ifa at maharashtra can availed and rest of india ifas cant .

SURESH KUMAR DAGA · 7 years ago `

sir i am senior citizen &my commisson all together approx Rs.4lac from 15 amc &hdfc fixed deposit broker 7not intrested take G.S.T..my que.can.i.penalise.by.deptpl.advice

Abhijit · 7 years ago `

Nishant dont try to please AMCs by writing such writeups which surpasses GST Act.. No more fooling distributor fraternity by writing baseless. Amcs got to pay 18 over and above 100 Rs commission since they cant surpass GST act.

Meet Sugat · 7 years ago `

is gst registration mandatory for all ?

Vikas Jain · 7 years ago `

Dear Sir ,I am an IFA and earning from MF business under 3 Lakhs PA. If I have take GSTN how many times return file in a year?

Mahesh Bansal · 7 years ago `

My mf commission inco

syed ajaz hussain · 7 years ago `

what will be the constitution of business for mutual fund distributors while obtaining gst number ????

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