Small MF distributors latch on to online platforms to beat GST complications
The nightmare on GST compliance and fall in trail commission on older assets have been slowly pushing individual MF distributors to adopt online platform services and gain expertise in selling other financial products.
Since April, MF distributors attract GST of 18 per cent on the commission paid by MFs. This has not only made individual distributors to register for GST number but also upload proof of expenses such as office rent, technology software and travel to claim the GST deducted by MFs.
Moreover, the highest TER (total expense ratio) for equity scheme with AUM of Rs.500 crore was reduced from 2.25 per cent to BER (base expense ratio) of 2.10 per cent. Expense ratio reduces progressively as the AUM grows.
The lowest TER of 1.05 per cent for equity schemes with asset of over Rs.50,000 crore has been reduced to 0.95 per cent under BER. This has resulted in lower trail commission paid to distributors for asset accumulated over years.
