The Securities and Exchange Board of India (SEBI) has extended the deadline for submitting public comments on its consultation paper titled “Comprehensive Review of SEBI (Mutual Funds) Regulations, 1996.” The consultation paper, first released on SEBI’s website on October 28, 2025, invited stakeholder feedback on proposed revisions aimed at modernising and simplifying the nearly three-decade-old regulatory framework governing mutual funds.
The original deadline for public comments was November 17, 2025. However, SEBI said it received several requests from industry participants and other stakeholders seeking more time to study the proposals and prepare their submissions. Taking these representations into consideration, the regulator has now extended the deadline by one week. Comments and suggestions may be submitted until November 24, 2025, SEBI announced.
The market regulator has proposed key changes on expense ratio charged by mutual funds such as removal of statutory levies like STT, GST, etc. to be excluded from Total Expense Ratio (TER) limits. The SEBI paper stated, “With a view to facilitate greater clarity and transparency, it is proposed to exclude all statutory levy i.e. STT, GST, CTT, Stamp duty from the expense ratio limits along with the present permissible expenses for brokerage, exchange and regulatory fees”.
New provision for optional performance based differential TER has also been proposed. Similarly, the consultation paper also proposes that brokerage caps be reduced to 2 bps for cash market and 1 bps for derivatives. The consultation paper noted, “to protect interest of investor and to ensure that expenses are charged fairly only once to the investors, the brokerage charge has been revised from 12 bps to 2 bps for cash market transactions and 5 bps to 1 bps for derivative transactions to bring clarity and transparency”.
Moneycontrol has previously reported that the regulator was likely to consider concerns of the mutual fund industry related to fees and the overall cost structure of funds. Sources indicated that the regulator is open to accepting and reviewing reasonable issues raised by the industry. The issue of brokerage caps has been a pain point for mutual funds. Moneycontrol had reported that the industry has argued that the proposed caps should not apply, as fund houses also use brokers for research support. While large funds have internal research teams, smaller funds often rely on external research. However, regulatory sources questioned why investors should be charged twice, noting that funds already charge investment management fees, which cover research as an integral part of investment management.
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