When one takes a service from any service provider there are charges involved. The stock market is a complex machine and although everything feels easy as pie today due to technological advancement, it was not so until few years ago.
The brokers are the real service providers when it comes to the stock market. They making buying and selling a child’s play and for making your experience wholesome and easy, there are charges to borne. All of these charges are not just taken by the broker but also by the stock or commodity exchange, the government too. Let’s see what those charges are:
1. Broker Charges or Brokerage
This is the first among many charges that one pays. This is exclusively charged by the broker for services rendered by you. The brokerage charges are as per the brokerage model offered by the broker. Broadly, there are 3 brokerage plans offered by the brokers in India:
- Brokerage in Percentage of Trading Volume
- Flat per trade brokerage
- Monthly Unlimited Trading Plan
The percentage % on the trade volume brokerage model is the one followed by Full-service or traditional brokers. The discount brokers offer a pay-as-you-trade model or a flat monthly one.
2. Transaction Charges (Exchange Turnover Fee)
The exchange involved levies this charge for using their platform and services. The BSE, NSE and MCX primarily and is also the larges that has to be borne by the trader. Below is the calculation for the transaction charge,
Transaction charge = Exchange Turnover Charges + Clearing Charges
3. Securities Transaction Tax – STT
The Securities Transaction Tax or STT as it’s called for short, is only charged on the ‘Sell Side’ of the intraday and FnO. This is essentially a tax payable on the securities that were transacted through the exchange. For Equity Delivery, STT is charges are applied on both sides and there’s no STT on Bonds, Currency and Mutual Funds. Below is a detailed breakdown,
- Segment STT on Share Trading
- Equity Delivery 0.1% on both Buy and Sell
- Equity Intraday 0.025% on the Sell Side
- Equity Future 0.01% on Sell Side
- Equity Options 0.017% on Sell Side(on Premium)
- Currency Futures No STT
- Currency Options No STT
- Commodity 0.01% on Sell Side (Non-Agri)
4. Commodity Transaction Tax (CTT)
This is a government tax and is levied on the exchange-traded commodity derivatives. The Commodity Transaction Tax or as its referred to as CTT for short is exempted for agricultural commodities but is levied on non-farm commodities or non-agro commodities like gold, silver and non-ferrous metals such as copper and energy products like crude oil and natural gas.
5. Stamp Duty
Another tax levied by state governments on documentation of securities transactions.
6. GST Tax
GST is a Pan India Tax by the Government of India for services provided. 18% is the GST on securities transactions charged on total cost of brokerage plus transaction charges.
GST on Share Trading in India
- Equity Delivery, Intraday, F&O – 18% on Brokerage + Transaction Charge
- Currency F&O – 18% on Brokerage + Transaction Charge
- Commodity – 18% on Brokerage + Transaction Charge
7. SEBI Turnover Fee or SEBI Charges
The central body or the regulator i.e. SEBI or Securities and Exchange Broad of India also charges a fee on all Buy and Sell transaction for securities. The charges are very nominal i.e. Rs.5 for every crore of volume and no charge whatsoever for debt based securities.
SEBI Turnover Fees
- Equity Delivery, Intraday, F&O 0.00005% (₹5/Crore)
• Currency F&O 0.00005% (₹5/Crore))
• Commodity 0.00005% (₹5/Crore)
The above fees or charges are provided in detail in the form of Contract Note by the broker.
What’s a Contract Note in the stock market?
The Contract Note is a summary of all your transaction for the day with the broker.
So this summarizes all the charges that are applicable to a trader or investor in the stock market.
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You can visit the List of charges to understand the brokerage charged in detail.
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