KFin Technologies (KFintech) has announced a comprehensive restructuring of mutual fund distributor brokerage payouts effective April 1, 2026. According to reports from CNBC TV18, this operational shift follows regulatory changes that move Goods and Services Tax (GST) outside the Total Expense Ratio (TER). The new system will separate GST calculations from base commission amounts, fundamentally altering how distributors receive their compensation.
Under the revised system, brokerage rates for all mutual fund schemes will be GST-exclusive from April 1, as reported by CNBC TV18. Distributors will initially receive only the base commission amount, with the GST component calculated separately by KFintech's systems. GST-registered distributors must remit tax to the government and submit proof via KFintech's portal or front offices before receiving their GST amounts.
The new process creates a clear distinction between registered and unregistered distributors. Distributors not registered under GST will continue to receive only the base brokerage, according to the operational note shared by KFintech. For GST-registered distributors, the revised process will apply to new investments, existing assets, and withheld brokerage from prior periods. In cases where monthly payments include brokerage for multiple categories, only the base commission will be released until GST compliance is verified.
KFintech will provide separate reports on computed GST amounts to Asset Management Companies (AMCs), as reported by CNBC TV18. However, AMCs are responsible for communicating these changes to their distributors. The system ensures that GST compliance is verified before distributors receive their full compensation, aligning with regulatory expectations for mutual fund accounting and tax obligations.