SEBI Overhauls Mutual Fund Fees: Major Changes to TER Benefit Investors

• SEBI approved significant amendments to the Total Expense Ratio (TER) framework, aiming to reduce the financial burden on mutual fund investors.
• Key levies like STT, GST, stamp duty, and CTT will no longer be included in TER calculations, and will be recovered separately from the Base Expense Ratio (BER).
• The new SEBI (Mutual Funds) Regulations, 2026, replacing the 1996 rules, were approved, tightening brokerage and distribution commission rules.
• The additional 5 bps expense for exit load has been removed, and brokerage caps for equity cash transactions increased from 2 bps to 6 bps.
• Base Expense Ratios (BER) were reduced for index funds, ETFs (1.0% to 0.9%), liquid scheme-based Fund of Funds (0.9%), and close-ended equity schemes (1.25% to 1%).

Why It Matters: SEBI's new TER framework and regulations aim to significantly reduce costs and enhance transparency for mutual fund investors.