Advisory Fees Don't Get a GST Exemption Just Because You're a CA
A recurring point of confusion for CA and CS professionals who've added SEBI Investment Adviser registration to their practice: investment advisory fees are fully taxable supplies of service under GST — there is no exemption carve-out for advisory income simply because the provider is also a chartered accountant, and no exemption because the underlying subject matter is "financial." Advisory fee income sits in the same GST framework as any other professional service fee, with its own classification, invoicing and place-of-supply nuances that IA-registered CAs need to get right from the first invoice.
Classification and Rate
Investment advisory services fall under SAC (Services Accounting Code) 9971 — financial and related services, more specifically within the sub-classification for investment and portfolio management advisory services, attracting GST at 18%. This applies whether the fee is structured as a flat retainer, an AUM-linked percentage fee, or a one-time financial planning fee — the SEBI fee-only mandate for individual IAs governs how the fee is structured, not whether GST applies to it. All three structures are taxable supplies at the standard rate.
Registration Threshold
A CA firm or individual IA crosses the mandatory GST registration threshold once aggregate turnover (across all services provided — audit, tax, advisory, everything combined, since these aren't segregated for threshold purposes) exceeds ₹20 lakh for most states (₹10 lakh for specified special category states) in a financial year, for a service provider. In practice, almost every CA firm adding an IA vertical is already GST-registered for its existing audit/tax practice — the advisory income simply gets added under the existing registration, correctly classified under the advisory SAC code, rather than treated as a separate registration event.
Place of Supply — Where It Gets Complicated
Place of supply rules for advisory services generally follow the recipient's location for B2B supplies (where the client is GST-registered) and the recipient's location as per available records for B2C — meaning an IA advising a client based in a different state than the firm's registered office needs to charge IGST, not CGST+SGST, and report accordingly. This is a common error we see in advisory invoicing — firms default to CGST+SGST out of habit from their local audit practice, without checking whether the advisory client sits in a different state.
NRI and Export-of-Services Treatment
For IA-registered CAs advising NRI or overseas clients, the question of whether the advisory fee qualifies as an export of service (zero-rated, with the ability to claim input tax credit refunds) depends on satisfying all the conditions under Section 2(6) of the IGST Act — supplier in India, recipient outside India, place of supply outside India, payment received in convertible foreign exchange, and the supplier and recipient not being merely establishments of a distinct person. The critical trap: if the "place of supply outside India" condition isn't clearly established and documented — for instance, if the advice genuinely relates to Indian securities and the underlying activity is treated as performance-based rather than recipient-location-based — export treatment can be denied on audit, leaving the firm liable for GST it didn't collect from the client. This needs case-by-case assessment, not a blanket assumption that all NRI advisory income is automatically zero-rated.
Reverse Charge and TDS Interplay
Investment advisory services do not generally fall under GST's reverse charge mechanism (RCM) when supplied by a registered IA to a client — the IA charges and collects GST in the normal forward-charge manner. Separately, clients paying professional/advisory fees above the prescribed threshold are required to deduct TDS under Section 194J of the Income Tax Act on the fee component — a compliance obligation for the client, but one that IA-registered CAs should flag proactively in their invoicing and client onboarding documentation so both sides reconcile correctly at year-end.
How We Help
Anuj Desai & Associates handles the GST compliance layer for CA and CS firms running IA advisory practices alongside their core audit and tax work. Our scope includes:
- GST classification and invoicing review — confirming SAC codes, rate application, and place-of-supply treatment across your advisory client base
- Export-of-services assessment for NRI and overseas advisory clients, including the documentation needed to defend zero-rating on audit
- GST return reconciliation where advisory income is combined with existing audit/tax turnover under one registration
- Notice and audit response if the GST department has raised queries on advisory fee classification or export treatment If your firm is charging GST on investment advisory income and wants a second opinion on classification and export treatment, write to office@anujdesaiassociates.com or call +91 96194 56656 — we'll review your invoicing before it becomes an audit finding.