Distributors who wish to either opt in or opt out of transaction charges (TC) can do so from September 01 to September 25. There are only two half-yearly windows available to change your status – March 01 to March 25 and September 01 to September 25.
Distributors are required to inform all their clients about transaction charges. Transaction charge is not paid if schemes are sold through the stock exchange route. Also, distributors are not supposed to split investments in order earn more transaction charges.
Earlier, distributors only had the option to opt in or opt out on all categories of products which was creating problems. Subsequently, in September 2012, distributors were allowed to opt in or opt out based on the scheme categories. Distributors can choose to levy TC from 11 scheme categories. (Liquid, gilt, debt, IDFs, ELSS, other equity schemes, balanced schemes, Gold ETFs, Other ETFs, fund of funds investing overseas and fund of funds – domestic.)
Distributors can levy a transaction charge of Rs 150 for getting a new investor and Rs 100 from existing investors if they mobilize Rs 10,000 or above. The transaction charge is deducted from the subscription amount and paid to distributors.
If you opt in, the TC will be deducted from the subscription amount for all your clients. Thus, you can’t charge one client and not charge another client. The option exercised for a particular category of scheme is applicable across all fund houses. AMFI shares the status of distributors regarding TC with all fund houses.
Around 6000 distributors had opted in when the rule was introduced in 2011. Many banks had opted in for TC. Later, distributors started opting out due to the inconvenience of collecting this fee. Currently, not many distributors are believed to be enthused about charging TC.
Click here to download opt in/opt out form. Distributors have to send this form to CAMS. Click here to see the list of CAMS POS.
