Mutual fund distributors seek tax relief after Sebi’s expense ratio overhaul

Mutual fund distributors have approached Amfi seeking inclusion under the reverse charge mechanism (RCM) to offset income losses from Sebi's revised total expense ratio (TER) norms introduced in December. Under the new framework, the TER was split into a base expense ratio and separately charged statutory levies including 18% GST, leaving small distributors exempt from GST or under the composition scheme unable to recover the GST component and facing roughly a 15% earnings decline. If approved, AMCs would pay the full commission to distributors and remit GST directly to the government, mirroring the current treatment of insurance distributors.