Archive · 18 Nov 2025
SEBI Reconsiders AMC Brokerage Fee Cut; Industry Seeks Lower STT
The head of India's market regulator, SEBI, said they will look again at a plan to lower the fees mutual funds pay to brokers.
This is because the mutual funds and brokers said the lower fees might make it hard for them to keep providing good services.
Meanwhile, other parts of the market asked the government to lower a different kind of tax on stock trades and change how some taxes on dividends work.
The government is thinking about these suggestions as they plan the next budget.
SEBI Chairman Tuhin Kanta Pandey agreed to re-examine the proposal to reduce brokerage fees for asset management companies (AMCs).
Market representatives sought lower Securities Transaction Tax (STT) on cash market trades during pre-Budget consultations.
Industry proposed buyback tax on profit component only and aligning short-term dividend tax rates for domestic and NRI investors.
SEBI's review follows concerns from AMCs and brokers about the sustainability of reduced fees and potential impact on services.
Finance Minister Nirmala Sitharaman held consultations with market representatives ahead of Union Budget 2026-27.
- Who
- SEBI Chairman Tuhin Kanta Pandey, Market Representatives, Finance Minister Nirmala Sitharaman
- What
- SEBI agreed to re-examine its proposal to reduce AMC brokerage fees; Market representatives sought lower STT and tax changes during pre-Budget consultations.
- When
- SEBI's decision was mentioned on a Monday following a closed-door meeting; Pre-Budget consultations were held in February ahead of Union Budget 2026-27.
- Where
- India
- Why
- AMCs and brokers raised concerns about the sustainability of reduced fees; Market representatives sought lower STT and tax changes to boost market sentiment and attract more investors.
SEBI
AMCs & Brokers
Brokerage Fee Cap
SEBI
Proposed lowering the cap on brokerage fees paid by mutual funds for cash market transactions to ensure transparency and reduce costs for investors.
AMCs & Brokers
Argued that a lower fee would be difficult to sustain, especially for small brokerages that provide research, and that this fee hit might be passed on to the broker.
Impact of Fee Reduction
SEBI
Focus on transparency and reduced costs for investors.
AMCs & Brokers
Concerns that reduced fees could impact the ability of AMCs to operate profitably and potentially affect the value-added services provided by brokers, like research.
- Regulator
- Securities & Exchange Board of India (SEBI)
- Proposed Fee Cap (AMC Brokerage Fees)
- 2 basis points (from 12 basis points)
- Tax Under Discussion (Cash Market Trades)
- Securities Transaction Tax (STT)
- Proposed Tax Changes
- Buyback tax on profit component only, aligning short-term dividend tax rates for domestic and NRI investors
- Budget Year
- 2026-27
