SEBI Scraps Transaction Charges For Mutual Fund Distributors

• 11 Aug 2025
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Earlier, the mutual fund distributors (MFDs) had to pay transaction charges. However, the Securities and Exchange Board of India (SEBI) has now scrapped the transaction charges for MFDs. This decision by the market regulator ends the provision that permitted asset management companies to pay charges for investments that exceeded a certain threshold. 

SEBI said that the move came after carrying out a public consultation in May 2023 and industry consultations in June during the present year. The market watchdog, as part of earlier framework, outlined that distributors would be charged if they contributed a minimum subscription amount of Rs. 10,000.

SEBI said in a circular on 9 August 2025, "...SEBI Master Circular for Mutual Funds dated June 27, 2024, allows AMCs to pay to the distributor transaction charges, subject to a minimum subscription amount of Rs 10,000 brought in by such distributors." 

Further, the market watchdog said, “Based on the feedback received from the industry and considering that distributors as agents of AMCs are entitled to be remunerated by the AMCs, the charges or commission, as prescribed under paragraph 10.4.1.b and paragraph 10.5 of the Master Circular, shall be done away with.” 

As a result, the paragraphs 10.4.1.b and 10.5 governing these charges are now obsolete. The new change will come into force with immediate effect according to the regulator. This change is anticipated to make the distributor compensation process simpler while maintaining transparency in the mutual fund domain.

Source: 

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