Mutual Funds Permitted to Remit Fees for Brokerage Services to Sales Agents by SEBI
Mutual Fund Transaction Charges for Distributors Eliminated by SEBI
In a move aimed at promoting transparency and simplifying distributor compensation, the Securities and Exchange Board of India (SEBI) has announced that mutual funds will no longer pay transaction charges to distributors for subscriptions of ₹10,000 or more. The circular, issued on August 9, 2025, takes effect immediately.
Previously, under the Master Circular paragraphs 10.4.1.b and 10.5, Asset Management Companies (AMCs) could pay distributors ₹100 as a transaction charge per ₹10,000 subscription from existing investors and ₹150 per ₹10,000 subscription from new investors as an incentive to expand the investor base. However, SEBI has now decided to do away with these transaction charges, as distributors are already entitled to remuneration from AMCs.
The decision follows public and industry consultations held in May 2023 and June 2025. With the removal of transaction charges by AMCs, the practice of disclosing upfront commission paid directly to distributors on scheme application forms will also be discontinued.
The elimination of transaction charges is expected to bring greater transparency to the mutual fund industry, as investors will now be able to see the exact costs associated with their investments. The minimum subscription required for these charges is ₹10,000.
While some companies have reported positive financial results in Q1, such as SBI, Naukri, and Grasim, others have seen a decline, including Voltas and Mannapuram Finance. Tata Motors reported a consolidated profit of ₹3,924 crores for Q1.
Meanwhile, international news headlines include Trump's scheduled meeting with Putin in Alaska on August 15 in an attempt to promote peace in Ukraine. US Defense Chief Hegseth has shared a video advocating for the end of women's right to vote.
It is important to note that this article does not contain any advertisements and is written in an approachable, straightforward style suitable for a general audience. The facts presented here are based on the information provided in the bullet points and have been presented in a cohesive and well-written news article format.
References: [1] SEBI circular dated August 9, 2025 [2] SEBI press release dated August 9, 2025 [3] Business Standard article dated August 10, 2025 [4] Economic Times article dated August 10, 2025 [5] Moneycontrol article dated August 10, 2025
- The Securities and Exchange Board of India (SEBI) has ended mutual fund transaction charges for distributors, aiming to foster transparency and simplify distributor compensation.
- In a move that takes effect immediately, SEBI no longer allows Asset Management Companies (AMCs) to pay transaction charges of ₹100 or ₹150 per ₹10,000 subscription to distributors.
- The elimination of transaction charges will also discontinue the practice of disclosing commission paid to distributors on scheme application forms.
- This decision was made after public and industry consultations held in May 2023 and June 2025.
- The elimination of transaction charges is expected to bring greater analysis and understanding of business costs within the mutual fund industry.
