Business · Companies · 3 hrs ago
Indian fund distributors consolidate registrations after commission rule change
Some Indian mutual fund distributors are consolidating registrations previously held in the names of family members.
Each distributor has an AMFI Registration Number, or ARN, to sell funds, but some used several ARNs to keep reported turnover below the ₹20 lakh GST registration threshold.
A revised commission framework separates base costs from taxes and took effect on 1 April.
Under the new arrangement, distributors receive the GST portion of commissions only if they are registered and submit a valid tax invoice; unregistered distributors receive only the base commission.
This removes the tax advantage of splitting commissions across multiple registrations, while making mutual fund costs clearer to investors.
Active distributor numbers could fall over the next six to eight months as registrations are combined, though one industry executive expects the total number of distributors to grow over the longer term.
Mutual fund distributors are asking asset management companies to consolidate multiple registrations under a single registration after a change to commission payouts removed the incentive to split income.
The change separates base commissions from GST, which asset management companies pay only when a distributor submits a valid tax invoice.
Some distributors had used registrations held by family members to keep turnover under the GST registration threshold.
A distributor executive expects the number of active distributors to fall over the next six to eight months as registrations are consolidated.
The revised expense framework also separates the base expense ratio from statutory levies and transaction costs.
- Who
- Mutual fund distributors and asset management companies.
- What
- Distributors are asking to consolidate multiple AMFI registrations under a single registration.
- When
- Following a regulatory change effective 1 April; the article was published on 4 November 2026.
- Where
- India.
- Why
- The change removed the financial incentive to split commissions across registrations to avoid GST.
This story does not have two clearly opposing sides.
Some distributors used multiple registrations, including registrations in family members’ names, to keep turnover under the GST registration threshold.
Sebi introduced a revised mutual fund expense framework separating the base expense ratio from statutory levies and transaction costs.
Asset management companies began receiving requests from distributors to consolidate their assets under a single registration.
- GST registration threshold
- Annual turnover above ₹20 lakh, subject to certain exemptions
- GST on taxable commissions
- 18%
- Consolidation outlook
- Active distributor numbers could decline over the next six to eight months
- Framework change
- Effective 1 April
What people are saying
The change is positive for the mutual fund industry, as it encourages distributors to simplify their business structures and focus on growing their operations, understanding their needs and recommending suitable products, rather than spending time managing multiple registrations and fulfilling its compliance