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The Indian government has announced that the Mutual Funds Regulations, 2026, are now in effect. SEBI will reduce the expense ratios of mutual funds by up to 15 bps (basis points). These new rules will take effect on April 1, 2026 & will lower costs for everyday investors.
The expense ratio is essentially the fee a mutual fund charges to manage your investment. SEBI has even renamed Total Expense Ratio (TER) to Base Expense Ratio (BER).
Now, BER sticks to core fund costs like management fees, distribution brokerage and registrar fees. External stuff like GST, stamp duty, STT, CTT, SEBI fees and exchange charges are out of BER's scope, rolled into the broader TER that investors actually see.
Do not get too excited just yet. The headlines may sound appealing, but you will see your actual costs in the following TER disclosures from fund companies. Still, this is good news for those looking to save money and earn better returns.
Must Read: Expense Ratio in Mutual Funds 2026: How It Eats Your Profits
New Base Expense Ratio Slabs by AUM (Assets Under Management)
SEBI created these MF expense ratio slabs based on the size of the mutual funds. According to the SEBI's new updates, here are the new expense ratio slabs for both equity and non-equity funds, based on their AUM:
| AUM Slab (in Crore) | New BER Equity | New BER Non-Equity |
|---|---|---|
| Up to Rs. 500 | 2.10% | 1.85% |
| Rs. 500–750 | 1.90% | 1.65% |
| Rs. 750–2000 | 1.60% | 1.40% |
| Rs. 2000–5000 | 1.50% | 1.25% |
| Rs. 5000–10000 | 1.40% | 1.15% |
| Rs. 10000–15000 | 1.35% | 1.10% |
| Rs. 15000–20000 | 1.30% | 1.05% |
| Rs. 20000–25000 | 1.25% | 1.00% |
| Rs. 25000–30000 | 1.20% | 0.95% |
| Rs. 30000–35000 | 1.15% | 0.90% |
| Rs. 35000–40000 | 1.10% | 0.85% |
| Rs. 40000–45000 | 1.05% | 0.80% |
| Rs. 45000–50000 | 1.00% | 0.75% |
| Over Rs. 50000 | 0.95% | 0.70% |
For open-ended equity funds with AUM of less than Rs 500 crore, the expense ratio cap will decrease from 2.25% to 2.10%. For debt funds in the same range, the charges will drop to 1.85%. Larger funds will see bigger reductions, which rewards them for their size.
This change will affect how fund managers operate, so expect some adjustments in their portfolios soon. If you are investing in equity mutual funds or debt schemes, keep this in mind for your following review.
