Lesson 6 of 50 for advisers · How trail is paid · 4 min read · Reviewed 13 Nov 2026
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.
Since 22 Oct 2018 fund houses pay distributors on a full trail model. No upfront commission and no upfronting of trail, in cash or in kind.
One exception: for a first-time investor’s SIP of up to ₹3,000 a month, a fund house may pay up to 1% a year of trail in advance, for up to 3 years. It is clawed back if the SIP stops.
From 1 Mar 2026 there is a one-off extra for bringing in a new investor from beyond the top 30 cities, or a new woman investor anywhere. It is 1% of the first lump sum or first year of SIPs, up to ₹2,000.
Trail stops if the client moves to a direct plan. If the client changes distributor, the new one is paid only after a 12-month cooling-off.
Key idea: Transaction charges of ₹100 and ₹150 were abolished on 8 Aug 2025.
Try the short quiz on this page to check what stuck.
No. There is no commission on a distributor’s own investments or on sponsor money.
ETFs, most domestic fund of funds, and overnight, liquid, ultra-short and low duration funds. Only one incentive is paid per investor.
After the 12-month cooling-off, the lower of the old and new distributor’s rates.
For learning only, not investment advice. Built in India by a team that tracks its own money on Reva.