New mutual fund brokerage rules from April 1: How GST changes will affect distributors

In an operational shift for the mutual fund distribution ecosystem, KFin Technologies (KFintech) has shared a process note detailing how distributor brokerage payouts will be restructured starting April 1, following regulatory changes that move Goods and Services Tax (GST) outside the Total Expense Ratio (TER).

From April 1, brokerage rates for all mutual fund schemes will be GST-exclusive, and distributors will initially receive only the base commission amount. T

The GST component will be calculated separately by KFintech’s systems and released only after GST-registered distributors remit the tax to the government and submit proof via KFintech’s portal or front offices. Distributors not registered under GST will continue to receive only the base brokerage.

The revised process will apply to new investments, existing assets, and withheld brokerage from prior periods. In cases where a distributor’s monthly payment includes brokerage for multiple categories, only the base commission will be released until GST compliance is verified. KFintech will also provide separate reports on computed GST amounts to AMCs, but AMCs are responsible for communicating these changes to their distributors.

This move is part of a broader effort to streamline mutual fund accounting, clarify GST obligations for distributors, and align brokerage payouts with regulatory expectations.

ALSO READ | New mutual fund classification rules introduced: How schemes will be structured

Note To Readers

Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.