Big Changes in Mutual Fund Commissions: SEBI's New GST Rules Explained (2026)

From April 1, 2026, every mutual fund distributor in India will be paid differently. Structurally differently. SEBI's new expense ratio framework, combined with AMFI's circular 123/2025-26 issued on March 12, 2026, changes how AMCs calculate, accrue and pay out commissions.

For Non-registered MFDs, this means an effective 15% reduction in what hits your account every month.

For GST registered MFDs, it means more paperwork, stricter compliance and a clawback clause you need to understand.

This is the complete breakdown.

TER to BER: The One Change That Triggered Everything

To understand why your payout is changing, you need to understand what shifted at the expense ratio level first.

SEBI approved this change on December 17, 2025, under the new SEBI (Mutual Funds) Regulations, 2026. It came into effect from April 1, 2026.

Until now, every mutual fund published a single TER, or Total Expense Ratio. This was an all-in number that bundled the fund's core operating costs together with taxes and statutory charges, including GST, STT, CTT, stamp duty, SEBI fees and exchange charges, into one figure. Investors and distributors had no clear way to see what the fund house was actually charging versus what was going towards taxes and levies outside anyone's control.

SEBI has now introduced the BER, or Base Expense Ratio, to fix exactly this. BER covers only the core costs of running a mutual fund scheme: fund management fees, distribution expenses, trade execution charges and RTA charges. All statutory and regulatory charges, including GST, STT, CTT, stamp duty, SEBI fees and exchange charges, now sit outside the BER entirely and are disclosed separately on actuals.

Importantly, TER has not been eliminated. It now simply means something more precise: BER plus all statutory and regulatory levies. The separation makes it possible to see what the fund house controls and what is just pass-through taxes.

What sits inside BER and what sits outside?

This structural change in how expenses are calculated and disclosed has created a ripple effect on how you get paid. Which brings us to the actual commission structure.

New Payment Structure: So How Does It Work Now?

From April 2026, all brokerage communications are exclusive of GST, compared to earlier, where brokerages were inclusive of GST.

Before vs After by MFD Type

Now let's understand this with real numbers.

The figures below are annualised. Your actual payouts come in monthly based on prevailing AUM, but looking at the annual picture makes the impact easier to see.

Rupee Breakdown at ~10 Crore AUM, 1% Trail Commission (Annualised)

On an annualised basis, that is ₹1,52,542 less per year on a 10 crore AUM book.

The Clawback Clause: What It Is and Why It Matters?

If you are GST-registered, there is one more thing you need to be aware of before May 2026. AMCs are now required to include a clawback clause in every distribution agreement. What this means in practice:

If the AMC has paid you the GST component, but that payment does not show up correctly in GSTR-2B, the AMC has the right to recover that GST amount from you. It gets adjusted against your subsequent payout.

A Timeline Breakdown: Let's take a look at What Happens When

Let us walk through exactly how the payment cycle flows every month, using April 2026 commissions as the example.

Miss any step in this chain and either your GST payment gets delayed, or you risk a clawback in the next cycle.

The Operational Reality of Working Across Multiple AMCs

Now zoom out for a second and think about what this looks like if you work with 15 or 20 AMCs. Every single month, you are:

• Raising 20-40 separate GST invoices
• Tracking 20 different commission statements
• Following up on 20 separate GST payments
• Monitoring 20 quarterly reconciliations to make sure nothing triggers a clawback

That is not a compliance task anymore. That is a full-time job running parallel to your actual business.

This is exactly where Wealthy changes everything.

Wealthy is built specifically for this kind of multi-AMC workload. Here is what it does for you:

• One consolidated invoice that covers all your AMCs in one go, fully compliant
• One dashboard to track every commission statement, payment status and reconciliation across all AMCs
• Automated reconciliation made easier for your convenience.
• Zero follow-up chaos – payment tracking is handled for you, not by you.

Less time on admin means more time on what actually grows your business: serving your clients and building your AUM.

Where Does This Leave You?

One regulatory change, TER becoming BER has restructured how commissions flow through the entire mutual fund distribution system. Cleaner and more transparent, but also significantly more demanding operationally.

For Non-registered MFDs, this is a perfect opportunity for them to move to a platform that not only offers multiple financial products, but also helps them build their business efficiently.

For GST registered MFDs, the income remains intact but only if your compliance is clean and timely.

The first payments under the new structure go out from May 1, 2026. That gives you a narrow window to get your invoicing process, your GST filings sorted.

The MFDs who move early will have the operational edge. The ones who wait will be playing catch-up on compliance while trying to grow their book at the same time.

Managing commissions across multiple AMCs just got more complex, but Wealthy makes it simple for you. Our Mission is to empower Wealth Professionals with advanced AI-based technology in the following ways-

• Fastest client onboarding
• Widest range of financial products
• Partner dashboard
• Partner training and development
• Dedicated support and training
• 10,000+ Partners | 25+ offices

Upgrade to Wealthy today.

India's fastest growing mutual fund distribution platform.

FAQs

1. Will mutual fund distributors earn less if they are not GST-registered after April 2026?

Yes. From May 2026, non-GST registered MFDs will receive only the base commission, which is ~84.75% of what you were receiving before. The GST component, which was previously embedded in your commission, will no longer be paid to you. On a 10 crore AUM book, that works out to roughly ₹1,52,542 less per year.

2. Do SEBI's 2026 commission rules apply to existing AUM or only new investments?

Both. AMFI circular 123/2025-26 explicitly covers existing AUM as of March 31, 2026, and all new inflows from April 1, 2026. The new structure starts from 1st April for which the first commissions will be paid in May.

3. What happens if a mutual fund distributor misses the GST invoice submission deadline?

Your GST component stays on hold. It does not lapse, but the AMC / Wealthy will not release it until a valid invoice is received.

4. What is the clawback clause in mutual fund commissions and how does it impact MFDs?

If the AMC / Wealthy pays you GST but it does not show up in GSTR-2B, they can recover that amount from your next payout. This makes timely, accurate GST filing non-negotiable. Any mismatch between what the AMC paid and what is reflected in GSTR-2B will be caught in the quarterly reconciliation. If you believe a clawback has been applied incorrectly, raise it through the AMC's formal grievance process and make sure you have invoice and payment records to back your case.

5. How can Wealthy simplify compliance for mutual fund distributors working with multiple AMCs?

Instead of raising separate invoices with each AMC and tracking 20-40 reconciliations every month, Wealthy consolidates everything into one invoice and one dashboard with automated reconciliation across all your AMCs. It is built specifically for this kind of multi-AMC compliance workload so you can focus on growing your book instead of managing paperwork.