Applicability of Section 24 of the CGST Act 2017 on Mutual Fund Agents

[Abhinav Jandial]

My client is a mutual funds agent and has been served SCN from department for Non-Payment of GST on commission received from AMC for the years 2017-18 to 2023-24. His turnover is less than 20 lakhs from 2017-18 to 2020-21. but the officer is charging him under section 24(vii) and applying section 76 on him (Tax collected but not paid to Government since the AMC has declared that whatever commsion we pay to agent is all inclusive of GST. But my client have been receiving 1% commission before GST and after GST also. Nor he has raised any invoice or collected any GST from AMC.

I think there is any circular or notification REGARDING NON-APPLICABILITY OF section 24 on mutual fund agents.

please advise

AI Summary

Mutual Fund Agent Challenges GST Liability on Commissions; Questions on Section 24(vii) & Section 76 of CGST Act A mutual fund agent received a show-cause notice for not paying GST on commissions from an Asset Management Company (AMC) for 2017-2024. Despite a turnover below Rs. 20 lakhs from 2017-2021, the department applied Section 24(vii) and Section 76 of the CGST Act, suggesting the agent collected tax but did not remit it. The agent argues that commissions are GST-inclusive and no invoices were issued or GST collected. Discussions indicate that mutual fund agents are not liable for compulsory registration under Section 24(vii) if their commission is below the threshold, as they do not supply on behalf of another taxable person. Circulars from the CBIC clarify the principal-agent relationship, emphasizing that mutual fund agents facilitate transactions in securities, which are non-GST supplies.