Hey MFD, if you think paying GST alone means you’re compliant, you’re missing a big part of the picture. Because GST isn’t just about payment. It’s also about doing things the right way, like issuing proper GST invoices and maintaining records.
And if you don’t? You could face penalties under Section 73 or 74. That’s not worth the risk. Cafemutual recently shared that India’s top 2,500 distributors paid a whopping Rs. 2,200 crore in GST last year. So yes, GST compliance is serious business.
Let’s break it all down, in simple language, and show you how the right mutual fund software can make GST compliance super easy.
What’s the GST Rule for MFDs?
Let’s start with the basics.
Who Needs to Register for GST?
- If your income is below Rs. 20 lakh per year, you’re exempt (in most states).
- For MFDs in Tripura, Mizoram, Nagaland, and Manipur, the limit is Rs. 10 lakh.
This Exemption Applies To:
- Individual MFDs
- Sole Proprietorships
- Partnerships
- LLPs, Private & Public Limited Companies
But hold on, you’re not eligible for exemption if:
- You’ve connected a payment gateway to your website.
- You’re an NRI or overseas distributor.
You’re still eligible if you’ve connected your website to BSE, NSE, or MF Utility APIs.
What To Do Once Your Income Crosses the Limit?
Once you cross that threshold, here’s what to do:
- Apply for a GST license within 1 month.
- Basically, in the first year, you have to pay Goods and Services Tax only on your income over the limit.
- From year two onwards, pay GST on your full income.
What Counts as Income?
Add it all up:
- Mutual fund commissions
- PMS & AIF commissions
- Insurance commissions
Quick notes:
- PMS/AIF often pay net commissions. But if you give your GST number, you get 18% more.
- Insurance uses reverse charge, so you don’t pay GST again — but it still counts in your total income.
Got lower income next year? You can cancel your GST registration and reapply when needed.
What Does GST Compliance Actually Involve?
Let’s keep it simple. Here’s what you need to do:
1. Raise Proper GST Invoices
- Use Service Code 997152 (this is specific to your services).
- Include:
- Your name, GST number, and business address
- AMC’s name and GST number
- Place of supply
- SGST, CGST, IGST details
- Your signature (if printed)
2. Maintain Your Records
You need to maintain a book of accounts with:
- Commission details
- Expense records
- Bank account info
These must be:
- Stored electronically
- Backed up regularly
- Kept for 6 years (yes, six!)
Tired of Doing This Manually? Here’s Where Software Helps
We know that all this manual paperwork can be really time-consuming and confusing. But mutual fund software for distributors can simplify things big time. Here’s What You Get:
1) Easy GST Invoice Creation
- Use ready-made formats, just fill in your details.
- Generate the invoice in seconds.
- Download the PDF and share it with AMCs.
2) Store Invoices in One Place
- Keep all your GST invoices organized and accessible.
- No need to dig through files.
3) Auto Backup & Safe Storage
- Your data is backed up automatically.
- Stored safely, and easy to retrieve during audits.
4) No More Errors
- Software handles all tax calculations.
- Avoids mistakes that could lead to fines or notices.
5) Updates With Latest GST Rules
- Always stay updated, without reading every circular.
Why This Matters to You as an MFD
Well, you’ve got multiple clients to serve, thousands of SIPs to grow, and different portfolios to track. Why waste your time on complicated compliance when back office software can handle it for you?
With the right tool:
- You save time
- You reduce errors
- You stay compliant
- You focus on growing your business
Simple, right?
Final Words
GST compliance is mandatory, but it doesn’t have to be hard. Thousands of MFDs across India use software to handle invoicing, track income, and maintain records
All without stress. So if you’re still doing GST manually, now’s the time to make the switch. Let the software handle the tax part, so you can focus on handling your business.
