It is one of the first questions anyone serious about launching an alternative investment fund asks – and one of the hardest to get a straight answer to. Most resources will either give you the SEBI fee schedule only (which is only a part of the story), or will quote a suspiciously round number with no breakdown. So let me take you through what you're really spending.
The SEBI Registration Fee: The Easy Part
SEBI charges a fee based on the category of AIF that you are registering. It is ₹5 lakh for Category I, ₹10 lakh for Category II and ₹15 lakh for Category III. These are fixed, non-negotiable and paid online through the SEBI Intermediary (SI) Portal.
One thing that trips people up: the application fee of ₹1 lakh (plus 18% GST) is paid separately at the time of filing, before the registration fee kicks in. And SEBI is clear on this you have to tender the exact amount including paise, without rounding off or the system may reject the payment.
So, the government-facing cost for a Category III fund is more like ₹16-17 lakh, when you factor in both application and registration fees, with GST layered in, right away.
The Real Cost Stack: What SEBI Doesn't Tell You
This is where new fund managers consistently get it wrong. The SEBI fee is a known finite number. Everything else is variable – and often much bigger.
Legal drafting and structuring fees can generally be in the lakhs for a competent firm, but can vary significantly depending on the complexity of the fund structure, the quality of the law firm and whether they have prior experience with AIF work. Don’t be stingy here. The single biggest reason for delays is bad PPM drafting. Almost 90% of the queries from SEBI were on account of issues in the Private Placement Memorandum. A cheap lawyer who churns out a generic PPM will cost you far more in time and back-and-forth than a good one costs in fees.
Entity setup costs – setting up the trust, LLP or company that will be the fund vehicle – add another ₹1–3 lakh for the trustee, trust deed registration, stamp duty and associated filings. Most funds prefer the trust structure, which offers more flexibility, quicker approvals and easier governance.
Another layer is mandatory service providers. SEBI expects the fund to appoint a fund manager, trustee, auditor, valuer and compliance officer before giving registration. Each has to meet the eligibility norms set by SEBI. Some have upfront setup fees, others start billing on retainer from Day 1.
Putting it all together, a reasonable all-in estimate for the pre-launch, pre-corpus phase looks something like closer to 12-18 Lakhs
Category III funds, particularly those with complex strategy documents or multiple schemes, can push past ₹18 lakh without much difficulty.
Ongoing Costs: The Bill That Doesn't Stop
You only need to register once. The AIF is not running.
₹1 lakh per scheme for addition of new scheme after registration. In addition to this, you have recurring audit fees, valuation fees (key post the 2024 amended valuation guidelines), retainers for compliance officer, custodian fees once the corpus crosses applicable thresholds and the cost of SEBI’s expanded reporting requirements through the SI Portal.
SEBI has been steadily tightening its monitoring. The 2024 Master Circular consolidated all previous guidelines on PPM standards, audit requirements and governance norms and 2025 brought out new rules for priority distribution models, tighter disclosures on related-party transactions and increased reporting requirements. Each of these amendments has an associated compliance cost, even if implicit.
A realistic recurring compliance budget for a small-to-mid-size AIF is somewhere between ₹5–15 lakh per year, depending on fund size and activity.
A Few Other Numbers Worth Keeping in Mind
Registration fees drags everyone’s attention but the minimum financial thresholds are what determine whether launching makes economic sense in the first place.
Maintaining of minimum corpus which is ₹20 crore for all categories (₹10 crore for angel funds), and each investor must commit at least ₹1 crore, except employees or directors of the AIF or its manager, who can invest as little as ₹25 lakh.
The sponsor also has skin in the game requirements which mean a continuing interest of 2.5% of the corpus or ₹50 lakh, whichever is lower, must be maintained — and it cannot be in the form of waived management fees.
Timeline and What Actually Causes Delays
Generally SEBI takes 4-8 weeks from the date of filling of application to grant of registration, if all the documents are in order. End to end including the preparation phase most fund take 8-12 weeks.
Reasons which slows things down?
Consistently the same issues: vague investment strategy, insufficient description of the team's experience, underdeveloped conflict-of-interest policies, and a trustee that isn't clearly independent. SEBI's queries are fairly predictable once you've been through the process a few times. A sharp legal team that knows the regulator's concerns will anticipate them; a generalist firm won't.
Bottom Line
If you are calculating AIF registration costs ₹5 lakh, then you are only counting the SEBI fee for a Category I fund and ignoring everything else. Whereas total cost will range between ₹15–27 lakh depending on category, fund structure complexity, and the quality of advisors you engage. First-year compliance costs and you're comfortably above ₹25 lakh before you've done a single investment.
India now has nearly 1,700 registered AIFs, and total AIF commitments crossed ₹13.5 trillion in 2025. The structural costs are real, but they're a small fraction of what a well-run fund can generate. The question is whether your corpus and investor base justify the setup — and whether your advisors are experienced enough to get you through SEBI's process without burning time and money on avoidable queries.