Skip to main content

GST might hit small fund distributors, investment advisors


Advent of the goods and services tax (GST) is likely to hit small distributors and investment advisors, says the mutual fund (MF) sector.Players say ambiguity over input tax credit and interstate transactions has created confusion among distributors, particularly those earning less than Rs 20 lakh a year.

Meanwhile, fund houses and the Association of Mutual Funds in India (Amfi) are helping distributors get GST ready, by conducting workshops and educating through lists of ´Frequently asked questions (FAQs). Amfi has also appointed consultancy entity PwC India to assess the impact on the sector.

According to industry players, registration and obtaining of GST number is mandatory for all MF distributors, irrespective of their income.Fund houses are expected to deduct GST from distributors´ commission, even those whose income is below the threshold of Rs 20 lakh, if they haven´t provided their GST number.

Those providing it will be paid the entire brokerage and distributors will have to do the GST filing at their end.Sector executives have urged all distributors to register for getting the input tax credit.

There is lack of clarity on how independent financial advisors (IFAs) will be eligible for this credit, as many don´t operate out of offices.There is also lack of clarity over interstate and intrastate transactions, say players.Most fund houses are registered in Maharashtra.

Earlier, the impression was that distributors with less than Rs 20 lakh annual income and registered in the state were exempt from GST. However, if distributors operate outside the state, there would be no exemption, say experts.

That would mean an impact on distributors, particularly IFAs. Manoj Nagpal, chief executive of Outlook Asia Capital, says: “MFs areaunique case and GST might work asadisadvantage to the sector from distributors´ point of view.

IFAs will be negatively impacted. The sector could go through short-term turmoil. New comers to the (MF) distribution business might find GST an entry barrier and feel the pinch of double taxation in a business which has thin profit margins.

Business Standard New Delhi, 06th July 2017

Comments

Popular posts from this blog

Budget: Startup sector gets new Fund of Funds, FM to allocate Rs 10K cr

  The Indian startup sector received a boost with Finance Minister Nirmala Sitharaman announcing the establishment of a new fund of funds (FoF) in the Budget 2025. The minister unveiled a fresh FoF with an expanded scope, allocating Rs 10,000 crore. The initial fund of funds announced by the government with an investment of Rs 10,000 crore successfully catalysed commitments worth Rs 91,000 crore, the minister said.   “The renewal of the Rs 10,000 crore commitment to the Fund of Funds for alternative investment funds (AIFs) is a significant step forward for the Indian startup and investment ecosystem. The initial Rs 10,000 crore commitment catalysed Rs 91,000 crore in investments, and I fully expect this fresh infusion to attract an additional Rs 1 lakh to Rs 1.5 lakh crore in capital,” said Anirudh Damani, managing partner, Artha Venture Funds.   Damani further added that this initiative will provide much-needed growth capital to early-stage startups, further strengthenin...

After RBI rate cut, check latest home loan interest rates of top banks for loans above Rs 75 lakh

  The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points from 6.50% to 6.25% in its monetary policy review as announced on February 7, 2025. After the RBI repo rate cut, banks such as SBI, Canara Bank, PNB, and Union Bank among others have cut their repo linked lending rates. Most other banks are also expected to cut their lending rates in line with the RBI rate cut. After banks cut their lending rates, their home loan borrowers will have to pay less interest. Normally, when a lender cuts the lending rate, borrowers get two options: Either to go for a reduction in EMIs or reduce the tenure of the loan. The second option will help the borrowers clear their home loan outstanding faster. In case, the borrower goes for reduction in EMI then the lower lending rate of the lender would mean lower Equated Monthly Installment (EMI) for borrowers.   EMI is the amount you will pay on a specific date each month till the loan is repaid in full.A repo rate-linked home ...

GST collections rise 9.9% to exceed Rs 1.96 trillion in March 2025

  Gross GST collection in March grew 9.9 per cent to over Rs 1.96 lakh crore, government data showed on Tuesday. GST revenue from domestic transactions rose 8.8 per cent to Rs 1.49 lakh crore, while revenue from imported goods was higher 13.56 per cent to Rs 46,919 crore. Total refunds during March rose 41 per cent to Rs 19,615 crore. After adjusting refunds, net GST revenue stood at over Rs 1.76 lakh crore in March 2025, a 7.3 per cent growth over the year-ago period.       - Business Standard 02 th March, 2025