11 May 2022
1. What is applicable threshhold limit for a MF agent who gets commission from Mutual Funds on investments by his clients made through him? 2. Is it subject to reverse charge like insurance agents or is he required to register his business under GST on crossing threshhold limit
11 July 2024
Let's address your queries regarding Mutual Fund (MF) agents and their GST obligations:
### 1. Threshold Limit for GST Registration:
GST registration is mandatory for businesses that cross the prescribed threshold limits of aggregate turnover. As of my last update, here are the threshold limits for GST registration:
- **Normal Category States**: For businesses operating in states other than special category states (like Manipur, Mizoram, Nagaland, etc.), the threshold limit for GST registration is **Rs. 40 lakhs** of aggregate turnover in a financial year.
- **Special Category States**: For businesses operating in special category states, the threshold limit is **Rs. 20 lakhs** of aggregate turnover in a financial year.
- **Compulsory Registration**: Certain categories of businesses, including inter-state suppliers of taxable goods or services, are required to register for GST irrespective of turnover.
### 2. GST Liability for Mutual Fund Agents:
- **Reverse Charge Mechanism (RCM)**: Mutual fund agents typically receive commission from mutual funds for investments made by their clients. As per GST regulations, services provided by mutual fund agents to mutual funds are subject to Reverse Charge Mechanism (RCM). Under RCM, the liability to pay GST rests with the recipient of the service (in this case, the mutual fund), rather than the supplier (the mutual fund agent).
- **Registration Requirement**: If a mutual fund agent's aggregate turnover exceeds the threshold limit applicable to their state category (normal or special category state), they are required to register for GST.
### Conclusion:
- **Threshold Limit**: The threshold limit for GST registration is Rs. 40 lakhs (normal states) or Rs. 20 lakhs (special category states) of aggregate turnover in a financial year.
- **Reverse Charge**: Mutual fund agents are subject to GST under the Reverse Charge Mechanism (RCM) for the commission they earn from mutual funds.
- **Registration Requirement**: Mutual fund agents need to register for GST once their turnover exceeds the applicable threshold limit for their state category.
It's advisable to consult with a GST practitioner or a tax advisor to get specific guidance tailored to your location and business circumstances, as GST rules and thresholds may vary or be updated.
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