50 free lessons for mutual fund distributors (MFDs) and SEBI-registered investment advisers (RIAs) in India: ARN and EUIN, MFD or RIA, fee limits, trail commission, expense ratios, SIF, PMS and AIF distribution, advertising and finfluencer rules, nominees, client conversations on returns and tax, record keeping and your ARN business. Every rule links to SEBI's or AMFI's own document.
Registration
ARN and EUIN, MFD or RIA, becoming an RIA, part-time advisers, research analysts and NRI onboarding.
ARN, EUIN and renewal: What happens to a mutual fund distributor’s trail if the ARN is not renewed on time? 4 min An ARN and EUIN are valid for 3 years. From the day after expiry the distributor cannot sell, new purchases go into the Direct plan, and trail is withheld. Renewed within 3 months, the withheld trail is paid. Renewed later, that trail is forfeited and trail restarts only from the renewal date.
MFD or RIA: who may advise: Can a mutual fund distributor call themselves a financial adviser? 4 min No. Only a SEBI-registered investment adviser may use names like Independent Financial Adviser, IFA or Wealth Adviser. A distributor may give advice only as incidental to selling, and must describe itself as an AMFI-registered Mutual Fund Distributor with its ARN on every communication.
Advice and distribution, kept apart: Can an investment adviser also earn commission from the same client? 4 min No. An individual adviser may not distribute at all, and the adviser’s family may not distribute to the adviser’s clients. A firm must choose per client: advice with no commission anywhere in its group, or distribution with no advisory fee. A client’s family counts as one client.
What an RIA may charge: How much can a SEBI-registered investment adviser charge a client? 4 min Up to 2.5% a year of assets under advice, or up to ₹1,51,000 a year as a fixed fee, per family, across all services. The ceiling is whichever is higher. Fees can be taken up to a year in advance with the client’s agreement. The caps cover individual and HUF clients who are not accredited investors.
Certificates and continuing education: Which NISM certificates do mutual fund distributors and investment advisers need? 4 min Distributors need NISM Series V-A, valid 3 years and renewed by retaking the exam or a one-day continuing education course. Advisers need a graduate degree plus NISM X-A and X-B, renewed by passing X-C before they expire. Since 24 Jun 2026, an adviser’s sales staff may take the lighter XXV-B.
Becoming an RIA: What do you need to register as an investment adviser with SEBI? 4 min A graduate degree or a CFA Charter, plus NISM’s X-A and X-B certifications (or NISM’s postgraduate programme in investment advisory or financial planning). You enlist with BSE, which administers advisers, and keep a deposit of ₹1 lakh to ₹10 lakh depending on clients. SEBI’s fees for an individual are ₹2,000 to apply and ₹3,000 to register.
Part-time investment advisers: What is a part-time investment adviser under SEBI’s rules? 3 min An individual or partnership firm that advises for a fee while running another business or job unrelated to securities, such as a CA, doctor, lawyer, teacher or licensed insurance agent. They meet the same qualification as full-time advisers, may serve at most 75 clients at any time, and must call themselves a part-time investment adviser.
Research analyst or adviser: What is the difference between a research analyst and an investment adviser? 3 min A research analyst publishes research: reports, buy, sell or hold calls, price targets or views on public offers. An investment adviser advises a client on their own investments. An RA charges only a fixed fee, capped at ₹1,51,000 a year per family for individuals; an adviser can also charge up to 2.5% of assets. An individual can hold both registrations.
Sub-distributors and EUINs on every sale: What happens if a mutual fund purchase has no EUIN? 3 min It is processed in the Regular plan. The investor has 30 days to give a valid EUIN or switch to Direct; after that the commission is lost for good. The only exception is a sale with no interaction at all, where the investor signs AMFI’s declaration that the EUIN was left blank on purpose.
Onboarding NRI clients from abroad: Can an NRI complete mutual fund KYC from abroad? 3 min From 3 Dec 2026, yes, if they live in a FATF-compliant country. SEBI dropped the rule that the client be in India for video verification: PAN is checked with the tax database, the passport collected, and video verification done with geo-tagging and an official present. The intermediary uploads the record to the KYC agency within 3 working days.
Commission and costs
Trail, expense ratios, exit loads, stamp duty, GST, clawback and the maths of a book.
How trail is paid: How are mutual fund distributors paid commission in India? 4 min As trail only: a share of the scheme’s expenses, paid as long as the client stays invested in the regular plan. No upfront commission is allowed, with one exception for small SIPs from first-time investors. Trail stops when the client moves to a direct plan and pauses for 12 months when the client changes distributor.
Expense ratio slabs: What is the maximum expense ratio a mutual fund can charge in 2026? 4 min Under SEBI’s Mutual Funds Regulations, 2026, an active open-ended equity fund’s base expense ratio is capped at 2.10% on its first ₹500 crore, falling in slabs to 0.95% on very large funds. Other active funds start at 1.85%, and index funds and ETFs are capped at 0.90%. Brokerage and taxes such as GST come on top.
What the client’s statement shows: Does a mutual fund investor see the commission paid to their distributor? 3 min Yes. The half-yearly CAS for September and March shows, scheme by scheme, the commission paid in rupees on the investor’s holding, gross of the distributor’s costs. It also splits the scheme’s expense ratio into management fee, distributor commission and other expenses, for the plan the investor holds.
Direct by default on fund-house apps: Are direct plans now the default on mutual fund apps? 3 min SEBI’s chairman was reported in late October 2026 as saying that from 1 Nov 2026 direct plans would be the default on fund houses’ own platforms, with regular-plan buyers shown the higher expense. As of 13 Nov 2026 no SEBI circular had been published, so the written rules are unchanged: every scheme offers a direct plan, and distributor platforms are not affected.
Trail per crore: the maths of a book: How much trail does a mutual fund distributor earn per crore of AUM? 4 min Trail is a percentage a year of the client’s assets, accrued daily inside the scheme’s expenses. At an average trail of 0.8% a year, ₹1 crore of AUM earns about ₹80,000 a year before GST and costs. Actual rates differ by scheme and fund house; the gap between a scheme’s regular and direct expense ratio is the most it can be.
Exit loads: What is the maximum exit load a mutual fund can charge? 3 min Under SEBI’s Mutual Funds Regulations, 2026, an open-ended scheme’s exit load may not exceed 3% of NAV. The load, net of GST, goes back into the scheme. There is no exit load on bonus units, reinvested dividends, or a switch between the regular and direct plan of the same scheme.
Stamp duty on purchases: How much stamp duty is charged on mutual fund purchases? 3 min 0.005% of the value of units issued, since 1 Jul 2020, so ₹500 on ₹1 crore. Switch-ins are charged too, because the new units are bought with the redemption money. Redemptions, gifts, conversions between statement and demat form, and segregated portfolio units carry no duty.
GST on your commission: Does a mutual fund distributor pay GST on commission? 3 min A distributor whose aggregate turnover in a year exceeds ₹20 lakh (₹10 lakh in some special category states) registers for GST. Financial services of this kind are taxed at 18%. Mutual fund distributors are not on the reverse-charge list, which names insurance and recovery agents, so a registered distributor invoices the fund house with GST. Confirm current notifications with your CA.
Clawback: When can a fund house claw back a distributor’s commission? 3 min When trail paid in advance on a first-time investor’s small SIP is not earned because the SIP stops: it is recovered pro rata. The new-investor incentive is also subject to clawback if the investor leaves within a year. Other clawback comes from each fund house’s own commission terms, which distributors must honour.
Execution-only platforms: What is an execution-only platform for mutual funds? 4 min A digital platform that lets investors buy, sell and switch direct plans only, under SEBI’s framework in force since 1 Sep 2023. It must be a company, registered with AMFI as the fund houses’ agent or as a stock broker in the exchanges’ T2_EOP segment. It charges only flat fees, gives no advice, and may not also sell regular plans to the same investor’s family.
Rules you sell under
Fund categories, NFOs, SIFs, PMS and AIFs, advertising, complaints, nominees and overseas limits.
Selling SIFs: What does a mutual fund distributor need to sell a Specialised Investment Fund? 4 min An AMFI registration and a valid ARN, plus NISM Series V-D. Every ARN and EUIN on a regular-plan SIF application must hold V-D. Those who passed NISM XIII by 21 Sep 2026 may continue until it expires. The investor puts in at least ₹10 lakh per PAN across one fund house’s SIF strategies, unless accredited.
PMS and AIF distribution: What rules apply to distributing PMS and AIFs in India? 5 min A PMS distributor registers with APMI and is paid only as trail, out of the manager’s fees, with the commission told to the client beforehand. The PMS minimum is ₹50 lakh and AIFs ₹1 crore. AIFs offer a direct plan with no distribution fee; Category I and II may pay up to a third upfront, Category III only trail.
What your ads may say: What must a mutual fund distributor’s advertisement include? 4 min The tagline AMFI-registered Mutual Fund Distributor with name and ARN, and the exact line: Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Ads may not offer free advice, gifts or rebates, use testimonials or projections, or name a scheme without the fund house’s approval.
The finfluencer rules: What do SEBI’s finfluencer rules mean for mutual fund distributors? 4 min Since 29 Aug 2024, SEBI-regulated firms and their agents, including distributors, may not associate with anyone who gives securities advice or makes return claims without SEBI permission. Association means payments, referrals or system links. Pure education is exempt, but an educator may not use market prices from the last 30 days when naming a security.
Nominees, KYC and transmission: How many nominees can a mutual fund investor add, and what does a claim need? 5 min Up to 3 nominees from 1 Sep 2026. Nomination is required for new single-holder accounts unless the investor opts out. Without a nominee, a claim of up to ₹5 lakh needs a notarised indemnity bond, proof of relationship and the other heirs’ consent; above ₹10 lakh it needs a probated will, succession certificate or court order.
Fund categories after 2026: What changed in SEBI’s mutual fund categories in 2026? 4 min SEBI’s circular of 26 Feb 2026 replaced the 2017 categories. There are now five groups: equity, debt, hybrid, Life Cycle Funds and other schemes. Solution-oriented funds were discontinued, a Sectoral Debt Fund was added, and Value and Contra funds from one fund house may overlap by at most 50%.
How an NFO works: How long can a mutual fund NFO stay open? 4 min At least 3 working days and at most 15 calendar days, except ELSS. Units are allotted within 5 working days of closing. The money must be invested as the scheme’s asset allocation says within 30 business days, extendable by another 30; after 60 business days out of line, investors may exit without a load.
Accredited investors: Who qualifies as an accredited investor in India? 4 min An individual or HUF with income of ₹2 crore, or net worth of ₹7.5 crore with ₹3.75 crore in financial assets, or ₹1 crore income plus ₹5 crore net worth. Since 5 Nov 2026 a ₹5 crore securities market exposure also qualifies, and AIF managers, SIF fund houses and portfolio managers may accredit their own investors.
Complaints: T3_SCORES and T3_ODR: How long does a SEBI-registered firm have to answer a T3_SCORES complaint? 4 min 21 calendar days. The complaint reaches the firm automatically, and it uploads an action-taken report. If the investor is unhappy, they can ask for a review within 15 days, answered within 10, and then a second review by SEBI. Disputes can also go to SEBI’s online dispute resolution portal, SMART T3_ODR, at any stage.
Overseas limits: How much can Indian mutual funds invest overseas? 3 min Up to US$7 billion for the industry and US$1 billion per fund house in overseas securities, and US$1 billion for the industry and US$300 million per fund house in overseas ETFs. A scheme may also invest in an overseas fund only if that fund’s exposure to Indian securities is 25% or less.
Client conversations
Returns, overlap, index, debt, gold and arbitrage funds, NRI clients and fund tax, without advice.
XIRR vs CAGR for a client: What is the difference between XIRR and CAGR for a SIP? 4 min CAGR assumes all the money went in on day one, which fits a lump sum. A SIP’s money goes in month by month, so its yearly return is measured by XIRR, which weighs each rupee by how long it was invested. Applying CAGR to a SIP’s total understates the return; fund factsheets and adverts show CAGR because they measure one unit from start to end.
Overlap and look-through: How do you measure the overlap between two mutual funds? 4 min Take every stock both funds hold, keep the smaller of its two weights, and add them up. That is SEBI’s own method, by ISIN. Fund houses publish full portfolios monthly within 10 days of month-end, and from 2026 they also publish category-wise overlap monthly. A Value and a Contra fund from the same house may overlap at most 50%.
Rebalancing talk, within the rules: What advice can a mutual fund distributor give about rebalancing? 4 min Basic advice on mutual fund schemes, incidental to selling them. SEBI’s FAQ limits a distributor to the mutual funds it distributes; advice on shares, bonds, AIFs, REITs or InvITs needs investment adviser registration. The riskometer, with six levels from Low to Very High and updated monthly, is the shared language for a scheme’s risk.
The fund tax clients ask about: How are mutual fund gains taxed in FY 2026-27? 5 min Equity-oriented fund units held over 12 months: 12.5% on long-term gains above ₹1.25 lakh a year (section 198, was 112A). Held 12 months or less: 20% (section 196, was 111A). Debt funds bought from 1 Apr 2023: taxed at slab, whatever the holding period (section 76, was 50AA). Hybrids in between: 12.5% after 24 months.
Capital gains statements at CA time: How are gains on mutual fund units bought before 1 February 2018 worked out? 4 min For equity-oriented fund units bought before 1 Feb 2018, the cost is the higher of the actual cost and the lower of the 31 Jan 2018 NAV and the sale value. So gains made up to 31 Jan 2018 stay untaxed. Units are matched first in, first out. For FY 2025-26, audit-case returns are due by 21 Nov 2026 after CBDT’s extension.
Index funds: tracking error and difference: What is the difference between tracking error and tracking difference? 4 min Tracking error is how much an index fund’s daily returns wobble around the index: the annualised standard deviation of the daily gap, disclosed daily and capped at 2% for equity passive funds. Tracking difference is the actual return given up versus the index, disclosed monthly for 1, 3, 5 and 10 years. Clients feel the difference; the error shows consistency.
Debt fund risk: the PRC grid: What is the Potential Risk Class matrix for debt funds? 4 min A 3 × 3 grid every debt scheme sits in, by its maximum interest-rate risk (Class I: Macaulay duration up to 1 year; II: up to 3 years; III: any) and maximum credit risk (A, B or C, by a credit risk value from AAA down). Moving to a riskier cell is a fundamental change, and unitholders are told.
Gold and silver funds: How are gold ETFs and gold fund of funds taxed in India? 4 min Neither is a specified mutual fund, so long-term gains are taxed at 12.5% under section 197. A gold fund of funds is long-term after 24 months. A listed gold ETF reads as long-term after 12 months, as a listed security under section 2(101), though a CA should confirm. Gold and silver ETFs must hold at least 95% in the metal or related instruments.
NRI clients: TDS and repatriation: How is tax deducted on mutual fund income paid to an NRI? 4 min A fund deducts tax on income in respect of units paid to a non-resident at 20%, or a lower treaty rate if the NRI gives a tax residency certificate. Redemption proceeds from investments made through an NRE account or inward remittance can go back to NRE; NRO money can be repatriated up to US$1 million a financial year.
Arbitrage funds: Why are arbitrage funds taxed as equity funds? 3 min An arbitrage fund holds at least 65% in listed Indian shares on the long side of its trades, hedged with futures. For tax, the 65% test counts listed shares and ignores the derivatives, so the fund qualifies as equity-oriented: 20% on gains within 12 months and 12.5% above ₹1.25 lakh after that.
A client review: the data checklist: What records must an investment adviser or distributor keep for client reviews? 4 min An RIA needs a signed advisory agreement, a risk profile the client has agreed to, and a suitability assessment before any advice, kept up on an ongoing basis. Advice conversations are recorded: signed notes, call recordings, email or SMS. An MFD keeps KYC records and its correspondence on suitability and the client’s consent or dissent.
SWPs for retired clients: How is a systematic withdrawal plan taxed? 4 min Each SWP payment is a redemption, so only the gain in the units sold is taxed, not the whole payment. For equity-oriented funds, gains on units held over 12 months are taxed at 12.5% above ₹1.25 lakh a year, and 20% within 12 months. There is no TDS on a resident’s capital gains; for NRIs, tax is deducted at source.
Goal SIPs in a child’s name: What are the rules for a mutual fund SIP in a minor’s name? 4 min Payment may come from the minor’s account, a parent’s or guardian’s, or a joint account. Redemptions go only to the minor’s verified account. At 18 the child completes KYC and SIPs pause until the folio changes to major. The child’s income is added to the higher-earning parent’s, with ₹1,500 a child exempt under the old regime.
Records and the RIA audit: When must a SEBI-registered investment adviser complete its annual audit? 4 min Within 6 months of the financial year end, by a CA, company secretary or, since 25 Mar 2026, a cost accountant. The report and any findings go to BSE, the advisers’ supervisory body, within a month and by 31 October. The adviser publishes the audit status on its website and gives the report to clients. Records are kept for 5 years.
What happens to your ARN business: What happens to a mutual fund distributor’s trail after their death? 5 min The nominee, or the legal heir if there is none, receives trail on business done before death, as trustee for the heirs, until the AUM is nil. No new business is accepted under the ARN. To move the clients to their own ARN, the heir needs NISM V-A and an ARN, writes to the clients, and applies within 12 months of the death.
KYD and empanelment: Can a distributor with an ARN sell any fund house’s schemes? 3 min No. An ARN registers you with AMFI, but you must be empanelled with each fund house separately. Business sent under an ARN a fund house hasn’t empanelled is processed in the Direct plan, so no commission is paid. Larger distributors also go through the fund house’s own due diligence at empanelment and at each review.
When commission stops: What happens to trail commission if a distributor’s ARN lapses? 3 min The ARN becomes invalid and trail is withheld. It is released if you renew within 3 months. Missing the annual self-declaration by 30 June also withholds commission from 1 July, and missing 30 September forfeits it. A suspension for breaking the code of conduct forfeits commission and moves SIPs and STPs to Direct.
MFCentral, MFU and the exchanges: What is MFCentral? 3 min A common platform built by the registrars CAMS and KFintech with AMFI, launched on 23 Sep 2021, after SEBI asked registrars to give investors one place for transactions, service requests, complaints, statements and capital gains reports. It also runs the folio lock that freezes debits, available from 30 Apr 2026.
Two-factor checks and client contacts: Can a distributor put their own mobile number on a client’s folio? 3 min No. Distributors must never fill in their own contact details. Registrars find and remove a distributor’s or adviser’s email or mobile seeded in folios that aren’t theirs. A shared contact is allowed only for family, with a declaration: spouse, dependent children, siblings or parents, or a guardian. The OTP that approves the client’s transactions goes to these contacts.
Client data and the DPDP Act: Does the DPDP Act apply to a small mutual fund distributor? 4 min Yes. The Act has no small-business exemption; the government may exempt classes such as startups from some duties but hasn’t. A distributor or adviser holding client data is a data fiduciary. Most duties, including notice, security, breach reporting and erasure, apply from 13 May 2027, 18 months after the Rules were notified on 13 Nov 2025.
For learning only. Reva gives analysis, not investment advice. Rules checked 13 Nov 2026; check the linked circulars for changes since.