The short answer: From 1 April 2026, SEBI’s new Mutual Funds Regulations split a fund’s cost into four lines: a Base Expense Ratio (BER), brokerage, transaction costs, and statutory levies such as GST, STT and stamp duty. Together they make the Total Expense Ratio (TER). A lower printed number is not automatically a cheaper fund.
Investor note, October 2026. Written and reviewed by the Krishna Vriddhi Capital research desk. Updated 20 October 2026. 5 minute read.
| Item | Detail |
|---|---|
| In force | 1 April 2026 |
| Regulation | SEBI (Mutual Funds) Regulations, 2026 |
| Applies to | Every mutual fund scheme in India |
| Source | sebi.gov.in, linked at the end of this note |
Key takeaways
- A fund’s cost is now shown as four lines (BER, brokerage, transaction costs, levies), not one headline number.
- SEBI has cut the caps on BER and on brokerage. Costs that used to sit inside one figure are now itemised outside it.
- Compare like with like: BER with BER, TER with TER. Setting an old TER beside a new BER flatters the new number.
What changed in how a fund’s cost is shown?
On 1 April 2026 the SEBI (Mutual Funds) Regulations, 2026 came into force, replacing the rulebook that had governed Indian mutual funds since 1996. The part that reaches your statement is the expense ratio. What a fund charges is now four lines, not one.
| Line | What it covers |
|---|---|
| Base Expense Ratio (BER) | The fund’s core running cost, capped by SEBI |
| Brokerage | Charged on trades the fund makes, now itemised |
| Transaction costs | Exchange and clearing charges for trade execution |
| Statutory levies | GST, STT and stamp duty, charged on actuals |
Together they make the Total Expense Ratio (TER). Costs that used to sit inside one headline number are now itemised outside it.
What are the new caps compared with the old ones?
| Cap, under the new frame | Before | Now |
|---|---|---|
| Equity fund BER, smallest AUM slab | 2.25% incl. levies | 2.10% excl. levies |
| Equity fund BER, AUM above ₹50,000 cr | 1.05% incl. levies | 0.95% excl. levies |
| Index fund / ETF BER | 1.00% incl. levies | 0.90% excl. levies |
| Brokerage on cash-market trades | 0.12% incl. levies | 0.06% excl. levies |
These are caps on what schemes may charge, from the SEBI board decision of 17 December 2025. Derivatives brokerage was cut from 0.05% to 0.02%. The extra 0.05% that exit-load schemes could charge is gone.
What does it mean in rupees? A ₹50 lakh example
Suppose you hold ₹50 lakh in an equity fund whose old factsheet showed a 2.25% TER. That is ₹1,12,500 a year inside one number. Under the new frame the same fund’s base expense is capped at 2.10%, which is ₹1,05,000, with brokerage, transaction costs and taxes added on actuals.
| Topic | Old printed TER | New capped BER | Printed number fell by |
|---|---|---|---|
| Yearly cost on ₹50 lakh | ₹1,12,500 | ₹1,05,000 | ₹7,500 |
The all-in cost fell by less than that, because part of it stepped outside the headline. A lower printed figure is not automatically a cheaper fund.
Illustrative only. It uses an assumed ₹50 lakh holding and an assumed old printed TER of 2.25%, and it is not a forecast or a projection of costs or returns for any fund.
What should you check on your own funds?
- Open a current factsheet and see whether it shows a Base Expense Ratio next to the TER.
- Check whether brokerage and transaction costs appear as their own lines.
- Do not set an old TER beside a new BER. It flatters the new number.
The question a factsheet cannot answer is which of your funds moved most, and whether the printed figure and the all-in cost moved the same way. That answer sits in your consolidated account statement, not in anything a fund house publishes.
Get this note as a one-page PDF
Keep it, forward it, or print it. It is sent to your inbox straight away, with a short checklist for reading your own statement: the cap table and the ₹50 lakh worked example, the official source references on sebi.gov.in, and a three-step check you can do on your own funds.
Want to see it on your own funds?
Bring your statement and we will show which of your funds moved the most. It is a free 30-minute call with a founder, by video or phone, in any time zone. You get your own numbers, and there is no obligation. Book a free consultation.
Questions people ask
What is the Base Expense Ratio (BER)?
It is the core running cost a fund may charge, capped by SEBI. Brokerage, transaction costs and statutory levies such as GST, STT and stamp duty now sit outside it and are shown separately.
Is the Total Expense Ratio (TER) still reported?
Yes. The TER is now the sum of the BER, brokerage, transaction costs and statutory levies, so it is built from four visible lines instead of one headline figure.
Is a fund with a lower expense ratio cheaper?
Not automatically. Costs that used to sit inside one number are now itemised outside it, so a lower printed figure can hide the same all-in cost. Compare like with like: BER with BER, and TER with TER.
What are the new BER caps for equity and index funds?
For equity funds the cap is 2.10% for the smallest AUM slab and 0.95% above ₹50,000 crore. For index funds and ETFs it is 0.90%. All are excluding levies, per the SEBI board decision of 17 December 2025.
What happened to brokerage and exit-load charges?
Brokerage on cash-market trades is capped at 0.06% excluding levies, down from 0.12%. Derivatives brokerage fell from 0.05% to 0.02%. The extra 0.05% that exit-load schemes could charge is gone.
Where can I see what my own funds actually cost?
A factsheet shows the printed ratios. Which of your funds moved most, and whether the printed and all-in costs moved together, is visible in your consolidated account statement (CAS). We can walk you through it on a free call.
Sources
SEBI (Mutual Funds) Regulations, 2026, F. No. SEBI/LAD-NRO/GN/2026/294, notified 14 January 2026, in force 1 April 2026; as amended up to 7 July 2026, F. No. SEBI/LAD-NRO/GN/2026/296 (regulations 66-67: expense framework). SEBI Board meeting decisions, 17 December 2025 (expense-ratio framework, brokerage limits, exit-load allowance). Master Circular for Mutual Funds, HO/24/13/11(1)2026-IMD-POD-1/I/7602/2026, 20 March 2026. All on sebi.gov.in.
Investor education only. Not investment advice or a recommendation of any scheme. Figures as of October 2026. More notes are in the research library.