Sebi has reworked how mutual fund expenses are calculated, separating fund management costs from statutory charges.
Statutory levies such as Securities Transaction Tax (STT), GST, stamp duty, exchange fees and other taxes will no longer be part of the expense ratio.
Brokerage charged by mutual funds in the cash market has been capped at 6 basis points, down from 12 basis points earlier.
In the derivatives segment, the brokerage cap has been reduced sharply to 2 basis points from 5 basis points.
The markets regulator noted that bundled expense ratios made it difficult for investors to understand what they were actually paying.
The revised expense ratio will reflect only the core cost of managing investors’ money, improving cost transparency.
Lower brokerage and clearer expense disclosure are expected to make mutual fund investing cheaper over the long term.
All the revised norms will come into effect from April 1, 2026.