Should MFDs earning less than Rs. 20 lakh go for voluntary GST registration?
A few of our readers have written to us with this query:
Since MFDs earning less than Rs. 20 lakh will be affected significantly by the new GST regime, is it recommended to opt for voluntary GST registration to claim input credits?
Dear MFDs,
While voluntarily opting for GST registration may seem logical at this moment, ideally, you should wait for a few months before taking a final decision.
A few MF officials requesting anonymity have said that the industry body will review this decision after the first three months of its implementation.
In the meantime, many MFD associations have been reaching out to SEBI and AMFI to revisit their decision. In fact, a few MFD associations are planning to approach the Ministry of Finance with this request.
Hence, it is better to adopt a wait-and-watch approach before opting for voluntary GST registration.
Having said that, voluntary GST registration can significantly improve your operational efficiency through higher compliance standards.
Post registration, MFDs can charge GST separately on their commission and claim input credit on expenses such as professional services, software subscriptions, electronic gadgets and other business-related services where GST is paid.
Considering the nature of the business, while individual MFDs may not derive a substantial benefit from input credits, it can still help them save some money.
However, beyond the business dynamics, voluntary registration can help you operate more professionally and build trust among clients.
From April 1, 2026, AMCs have been advised to pay base commission to both GST-registered and unregistered distributors. However, AMCs will pay the GST component only to GST-registered distributors, and that too upon submission of a valid tax invoice. This means distributors who do not have a GST registration number receive net commission — the current commission structure minus 18% GST.
Please note that Cafemutual has spoken to GST experts at consulting firms, compliance officials at AMCs and chartered accountants to confirm this report. We intend to clarify your doubts on GST. This does not tantamount to be a tax advice of any nature or a recommendation. Please take advice from a qualified tax advisor for your guidance.
Cafemutual is all set to launch India’s first event on Specialized Investment Funds (SIFs), Cafemutual SIF Summit 2026 on April 23 at the Leela, Mumbai.
With their potential to offer tailored strategies, flexibility and access to niche opportunities, SIFs are rapidly gaining attention as a differentiated investment avenue, positioned between traditional mutual funds and alternative investment funds.
