https://v2.webnotes.in/tags/trail-upfront-commission/Recent content in Trail-Upfront-Commission on WebNotesHugoen-INTue, 19 May 2026 00:00:00 +0000https://v2.webnotes.in/trail-upfront-commission/Tue, 19 May 2026 00:00:00 +0000https://v2.webnotes.in/trail-upfront-commission/<p><strong>Trail commission</strong> is the ongoing annual fee paid by AMCs to distributors based on a percentage of AUM under their distribution. <strong>Upfront commission</strong> was a historical one-time payment at subscription, but SEBI banned upfront commissions in 2018 (with limited grandfathering), leaving trail commission as the principal distributor compensation mechanism.</p> <h2 id="trail-commission">Trail commission</h2> <h3 id="structure">Structure</h3> <ul> <li>Ongoing annual fee.</li> <li>Percentage of AUM (typically 0.5 to 1.0% per annum for equity, less for debt).</li> <li>Embedded in regular-plan TER.</li> <li>Paid monthly by AMC to distributor.</li> </ul> <h3 id="cessation">Cessation</h3> <ul> <li>Stops if investor switches to direct plan.</li> <li>Stops if investor redeems units.</li> </ul> <h2 id="upfront-commission-banned-2018">Upfront commission (banned 2018)</h2> <p>Before SEBI&rsquo;s 2018 reform:</p>