Every mutual fund charges an annual fee for running the scheme and until recently that whole charge sat under one label, the total expense ratio or TER. The SEBI (Mutual Funds) Regulations, 2026 split the number in two. The base expense ratio or BER now covers the fund's own recurring costs, its management and operating expenses plus the distribution commission built into a regular plan. Brokerage, transaction costs and the statutory levies such as GST, securities transaction tax, stamp duty and exchange charges sit outside the BER cap and are charged on actuals on top of it.
TER survives only as the aggregate of BER plus those add-ons. The practical catch is that a lower BER headline is not automatically a cheaper fund, because the levies that ride outside it still land in the final cost. The number that reflects the full annual drag is the all-in TER rather than the BER alone, so a fair comparison between two schemes is TER against TER.
A fund quoting a 1.00% BER on ₹1,00,000 charges ₹1,000 as its base fee for the year. Brokerage and statutory levies are added on actuals over that, so the all-in TER reaching the NAV is a little higher than the ₹1,000 headline.
Where It Shows Up #
Fund factsheets and scheme pages published after 1 April 2026 quote the BER, often beside the older TER. FinSet scheme pages show the base expense ratio under the total expense ratio for the same reason.
The Source #
SEBI (Mutual Funds) Regulations, 2026, notified 14 January 2026, effective 1 April 2026. Issuing authority.
Related on FinSet #
This entry is general education, not personal advice or a recommendation of any scheme. Mutual fund investments are subject to market risks. Read all scheme related documents carefully.