Margin penalties are charged on F&O in case of insufficient minimum margins. Upfront penalty is on the broker if a client is allowed to trade with insufficient margins. Non-upfront is on the customer if there’s margin shortfall after entering a trade.
There’s been a debate over what’s an upfront penalty & what’s not.
If a broker ensures the required margin is available when entering trades, but if it goes up by EOD, is it upfront?
If the margin goes up when one of the positions exited or when a short option is in loss?
Exchanges issued a circular that these are upfront & shouldn’t be passed on to the client. The brokers & broker associations are trying to reason this with the exchanges since it is impossible for the broker to comply with—only the customer can.