Appeal Against Wrongful & Unjustified Deduction of GST from mutual fund advisor Commission
This petition had 2,961 supporters
Ministry of Finance, AMFI & SEBI
Subject- Appeal Against Wrongful and Unjustified Deduction of GST from our Commission for the Month of July, 2017.
Dear all respected Sir/Madam,
This is to bring to your kind attention that GST has been wrongfully deducted from our commission which got credited in the month of August, 2017. We wish to state that after a lot of deliberations and discussions, we have come to believe that we do not come under the purview of Goods & Services Tax (GST) and GST has been wrongly imposed upon Independent Financial Advisors (IFAs). We requested your AMC to show us at least the part of the GST Act which implies that GST can be levied upon our commission earnings. Till date, despite our repeated requests, no one from your AMC or any AMC for that matter has taken the trouble of at least showing us the Act or the part of the GST Act which implies otherwise.
The story so far behind the imposition of GST on IFAs has been quite dramatic. The GST Act gets implemented in India on 1 July, 2017. Members of Association of Mutual Funds in India (AMFI) goes in huddle. AMFI appoints PwC India, an audit and accounting firm, to decide whether IFAs should come under the ambit of GST or not. After a few days, PwC India recommends that IFAs have to pay GST. What were the findings of PwC? What was the rationale behind their recommendations? Why not bring the findings of the PwC into public domain? Does PwC India even understand the nature of our work and how the IFAs earn?
The simple analogy between IFAs on one side and doctors, engineers, designers, lawyers, architects etc. on the other side is completely incongruous. Let’s understand the same by examples. An architect charges, let’s say, Rs 100 to his client but bills him for Rs 118(his fee Rs 100+ Rs 18 as GST) and then the architect duly pays that Rs 18 as GST to the Government. All professional can’t be put under one basket. The basic difference between IFAs and other abovementioned professionals lies in the fact that the IFAs are ‘commission earning’ professionals while others are ‘fee charging’ professionals.
Let’s look at another impropriety in this taxation upon IFAs. Under the framework of Goods & Services Tax, the end users of the products or services have to bear the burden of GST. The person who markets the products or services should not be made to pay the GST. The correct analogy in this case is that of medical representatives who market the medicines but do not have to pay GST on his earnings. Unlike the shopkeepers, showrooms or retailers who first buy the products from the manufactures and then sell them to the consumers, we neither buy the products (mutual funds) from the manufactures nor transfer the mutual fund units to our investors. Like insurance agents, we simply help our investors buy mutual funds. Nothing more, nothing less. Yet we are being made to pay GST and the insurance agents are kept out of the GST tax net. We are happy for the insurance agents that no PwC or KPMG has done any awful study on their nature of work.
The real confusion might have arisen from the word ‘mutual fund distributors’. We are advisors and earn commission, rather than margins. We are commission agents in true sense. Of course, a little bit of advisory is embedded, which is very much natural whether you sell blankets or mutual funds. The word ‘turnover’ is completely alien to us. We have no ‘turnover’ in our profession. Neither do we have availability of input credit facility. We are mostly ‘one-man army’ and our bags are our offices.
In the present setup of things, the IFAs have to pay a total of 48% to 51% tax (total of income tax and GST) which is atrocious. This will be like nipping in the bud.
The IFAs are playing a small yet significant role in the making of a New India. The IFAs, too, are sincere and nation-loving citizens. We are law-abiding citizens and we neither collude with people having black money nor do we earn even a single paisa unlawfully. Why tax us so exorbitantly? Kautilya, the famous economist of ancient times, puts it aptly about how people should be taxed. He says, ‘The government should extract tax from the public the same way as a bee extracts nectar from flowers’.
Therefore we request you all to address our concerns. Please relook at the whole issue afresh. Please reconvene the meeting of AMFI to relook and please elaborate about the nature of work of the IFAs to the law firm that advise AMFI on this issue. Please represent our case to the authorities in Finance Ministry. Till there is no clarity on this, we request you AMC not to deduct any GST from our commission next month. We urge you to acknowledge our concerns and address the same. We sincerely hope your AMC will do the best to address our concerns. The IFAs are mulling over the possibility of legal recourse, if needed. The partnership between your AMC and IFAs is deep-rooted and in the times of distresses like this, we look up to you.
Today: Pravin is counting on you
Pravin Dhuri needs your help with “AMFI, Ministry of Finance, SEBI & : Appeal Against Wrongful & Unjustified Deduction of GST from mutual fund advisor Commission”. Join Pravin and 2,960 supporters today.