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Confirming an earlier CNBC-TV18 newsbreak, the Securities and Exchange Board of India (SEBI) has approved changes to mutual fund expense norms, reducing headline expense ratios, after deciding to exclude statutory levies from the expense ratio calculation.
Following the decision taken at its board meeting on Wednesday, December 17, statutory charges such as securities transaction tax (STT), commodity transaction tax (CTT), GST, stamp duty, SEBI fees and exchange fees will no longer be bundled into the expense ratio. Instead, these levies will be charged on actuals, over and above permissible brokerage limits.
SEBI said the total expense ratio (TER) will now be calculated as the sum of the base expense ratio, brokerage, and regulatory and statutory levies, bringing greater transparency to how fund costs are disclosed to investors.
As part of the overhaul, SEBI has also revised the base expense ratio for exchange-traded funds (ETFs). The current 1% cap, which included statutory levies, will be replaced with a 0.9% base expense ratio, excluding such levies.
MUTUAL FUND EXPENSE RATIO FOR EQUITY SCHEMES
Market participants said the changes will make mutual fund cost structures clearer, allowing investors to better differentiate between fund management fees and transaction-related charges, while also aligning ETF expense disclosures more closely with global practices.
SEBI is expected to issue a detailed circular outlining implementation timelines and operational guidelines.
Following the decision taken at its board meeting on Wednesday, December 17, statutory charges such as securities transaction tax (STT), commodity transaction tax (CTT), GST, stamp duty, SEBI fees and exchange fees will no longer be bundled into the expense ratio. Instead, these levies will be charged on actuals, over and above permissible brokerage limits.
SEBI said the total expense ratio (TER) will now be calculated as the sum of the base expense ratio, brokerage, and regulatory and statutory levies, bringing greater transparency to how fund costs are disclosed to investors.
As part of the overhaul, SEBI has also revised the base expense ratio for exchange-traded funds (ETFs). The current 1% cap, which included statutory levies, will be replaced with a 0.9% base expense ratio, excluding such levies.
MUTUAL FUND EXPENSE RATIO FOR EQUITY SCHEMES
| AUM (in ₹ cr) | Current | New |
| Up to 500 | 2.25% | 2.10% |
| 500-750 | 2% | 1.90% |
| 750-2,000 | 1.75% | 1.60% |
| 2,000-5,000 | 1.60% | 1.50% |
| 5,000-10,000 | 1.50% | 1.40% |
| 10,000-15,000 | 1.45% | 1.35% |
| 15,000-20,000 | 1.40% | 1.30% |
| 20,000-25,000 | 1.35% | 1.25% |
| 25,000-30,000 | 1.30% | 1.20% |
| 30,000-35,000 | 1.25% | 1.15% |
| 35,000-40,000 | 1.20% | 1.10% |
| 40,000-45,000 | 1.15% | 1.05% |
| 40,000-45,000 | 1.10% | 1.00% |
| >50,000 | 1.05% | 0.95% |
Market participants said the changes will make mutual fund cost structures clearer, allowing investors to better differentiate between fund management fees and transaction-related charges, while also aligning ETF expense disclosures more closely with global practices.
SEBI is expected to issue a detailed circular outlining implementation timelines and operational guidelines.
