GST liabilty on unregistered person

[Priyesh Mamnani]

My client is a mutual fund broker. Since the inception of GST, the mutual companies give brokerage inclusive of GST irrespective whether the broker is registered or unregistered under GST.

In 2018-19, my client received brokerage of Rs. 9,50,000 which also includes GST. As per GST law, GST registration was not required as turnover is less than 20 lakhs.

Now GST department is asking my client to pay the GST received from mutual fund companies for 2018-19 even there was not registration requirement at that time.

Whether we need to pay the GST or not

Request the experts to provide your views on the above issue

AI Summary

GST Collected by Mutual Fund Broker Below Threshold Must Be Paid Under Section 76; Examining Agreements Crucial A mutual fund broker received brokerage inclusive of GST in 2018-19 but was not required to register for GST as the turnover was below 20 lakhs. The GST department is now requesting payment of the GST collected. One expert noted that under Section 76, tax collected but not paid must be recovered, making it difficult for the broker to deny liability if GST was included in agreements and statements. Another expert suggested examining agreements and invoices to determine liability. Circular No. 57/31/2018-GST exempts certain agents from compulsory registration. A query was raised regarding a similar issue for a broker exceeding the turnover limit in later years.