Last updated: 10 October 2026 · By Yashna Bhuwania (ARN-325085)
Quick answer: From the April 2026 commission month, AMCs pay MFDs a base commission, plus 18% GST only to GST-registered distributors who upload a valid tax invoice. On ₹100 of old commission, registered or not, you keep ₹84.75 net. Registration is compulsory above ₹20 lakh turnover; below that, it pays only if input tax credit beats compliance cost.
This post is not tax advice; confirm with your CA.
| Key fact | Detail |
|---|---|
| Effective from | April 2026 commission month, paid in May 2026 |
| Applies to | New assets from 1 April 2026 and existing assets live on 31 March 2026 |
| Unregistered MFD gets | Base commission only |
| Registered MFD gets | Base commission + GST, after uploading a tax invoice |
| Invoice upload window | 7th to 15th of each month, on the RTA's portal |
| Registration threshold | ₹20 lakh aggregate turnover (₹10 lakh in Manipur, Mizoram, Nagaland, Tripura) |
What changed on 1 April 2026?
Commission rates are now exclusive of GST. Each AMC sets a base rate, and GST is calculated separately on top. Under the revised commission framework:
- The change starts with the April 2026 commission month, paid in May 2026.
- It covers new assets from 1 April 2026 and existing assets live on 31 March 2026, so your whole book moves, not just new SIPs.
- Unregistered MFDs get only the base commission.
- Registered MFDs get the base commission in the normal cycle. The GST is held until you upload a matching GST invoice to the RTA.
- If a valid invoice is uploaded by the 15th of the payment month, the GST is released by the end of that month.
- AMCs and RTAs check your invoices against their GSTR-2B. Any excess GST paid is clawed back from your next payment.
For the first cycle (April commission, paid May 2026), the invoice deadline was extended to 25 May, as reported by Cafemutual. The standard window is the 7th to the 15th.
What does the change look like in rupees?
Take ₹100 of commission under the old structure. Split into base and 18% GST, that is ₹84.75 base plus ₹15.25 GST.
| Unregistered MFD | Registered MFD (regular) | |
|---|---|---|
| Base commission from AMC | ₹84.75 | ₹84.75 |
| GST paid on top by AMC | ₹0 | ₹15.25 |
| Total received | ₹84.75 | ₹100.00 |
| GST paid to government | ₹0 | ₹15.25, minus any input tax credit |
| Net before ITC and compliance cost | ₹84.75 | ₹84.75 |
Illustrative. Base rates are set by each AMC. Assumes 18% GST and that ₹100 was the old GST-inclusive amount.
A registered MFD receives ₹100, but ₹15.25 is GST collected for the government, not income. After paying it over, it keeps ₹84.75, the same as an unregistered MFD. So registering does not earn you more commission.
Should you register for GST if you are below ₹20 lakh?
Below the threshold, registration is optional. The decision comes down to two numbers:
- What you gain: input tax credit (ITC) on GST paid for business purchases such as software, phone and internet, office rent, equipment and professional fees. Unregistered, that GST is just a cost.
- What you spend: compliance cost: a CA or accountant for returns, monthly invoicing to every AMC, and your time reconciling.
Registering pays off only when yearly ITC is more than yearly compliance cost.
| Assumption / line (illustrative) | Unregistered | Registered |
|---|---|---|
| Base commission a year | ₹5,00,000 | ₹5,00,000 |
| GST received from AMCs | ₹0 | ₹90,000 |
| Business purchases a year (incl. 18% GST) | ₹1,18,000 | ₹1,18,000 |
| GST in those purchases | ₹18,000 (a cost) | ₹18,000 (claimed as ITC) |
| GST paid to government | ₹0 | ₹90,000 − ₹18,000 = ₹72,000 |
| CA/accountant fee a year (assumed) | ₹0 | ₹24,000 |
| Net after expenses and compliance | ₹3,82,000 | ₹3,76,000 |
Here ₹18,000 of ITC does not cover ₹24,000 of compliance cost, so staying unregistered leaves the MFD ₹6,000 better off. Swap in your own numbers.
Two more points count against voluntary registration for a small MFD:
- Cash-flow lag. GST is held until your invoice is validated; a mismatch, even a rounding difference, makes the upload fail.
- Clawback risk. If your invoice does not appear in the AMC's GSTR-2B, the GST paid to you can be recovered from your next payout.
For how trail itself is calculated, see mutual fund distributor commission explained.
When is GST registration compulsory for an MFD?
| Rule | Detail |
|---|---|
| Threshold for services | ₹20 lakh aggregate turnover in a financial year |
| Special category states | ₹10 lakh in Manipur, Mizoram, Nagaland and Tripura |
| Inter-state supply | Service providers making inter-state supplies are exempt from compulsory registration while their all-India turnover is within the threshold (Notification 10/2017-Integrated Tax, as amended) |
| Deadline | Apply within 30 days of becoming liable |
Aggregate turnover is counted on your PAN across India, not just from mutual funds. If you also earn from other services, such as insurance commission or consultancy, ask your CA how they count. Use the base commission, not the old gross figure.
What SAC code applies to mutual fund commission?
CBIC's services classification has no line that names mutual fund distribution. The nearest group is 99715, "services auxiliary to financial services", which includes 997152 ("brokerage and related securities and commodities services") and 997159 ("other services auxiliary to financial services"). Your CA should pick the code for your invoices and use it consistently.
What does a registered MFD need to do every month?
- Check the RTA's pending-GST report, which lists GST amounts awaiting invoices.
- Raise a tax invoice for each AMC payment, matching the RTA's records exactly: ARN, AMC code, invoice number and date, commission, GST and payment date.
- Upload between the 7th and 15th on the RTA's portal.
- Report the invoices in GSTR-1 (or the IFF on quarterly returns), so they reach the AMC's GSTR-2B.
- File GSTR-3B and pay the GST. Under the QRMP scheme (turnover up to ₹5 crore), returns are quarterly but tax is paid monthly via PMT-06.
- Reconcile GST received against invoices raised, and watch for clawbacks.
- Keep every purchase invoice for ITC.
Sources
- GST Council: Registration under GST Law
- Annexure to Notification 11/2017-Central Tax (Rate): services classification (SAC)
- CBIC Circular 143/13/2020-GST: QRMP scheme
- Cafemutual reports of 25 Feb 2026 and 14 May 2026
Mutual fund investments are subject to market risks, read all scheme related documents carefully. Distribution services are offered through Khazana Fintech Pvt. Ltd. (AMFI ARN – 325085). GST rules and AMFI processes as of October 2026; check the latest position with your CA.
