Trading Charges In Stock Market
Last Updated: Dec - 13- 2019
Most people think brokerage is the only charge involved while trading in the Stock Market. In fact, in many cases, it is the smallest charge. In this post, we would like to explain all of the different charges that are applicable for share trading. This includes:
- Brokerage Fees
- Securities Transaction Tax (STT) / Commodity Transaction Tax (CTT)
- Transaction Charges (Stock Exchange + Clearing Member)
- SEBI Charges
- Stamp Duty
- Depository Charges.
Let us look at each of the components in a little more detail.
The brokerage fee is the fee that brokers charge for the service they offer. Each broker has its own brokerage model. While traditional brokers charge the brokerage in % of trade amount; the discount brokers offer flat monthly or per trade fee.
This is a Tax charged by the Government, for the transactions that you do in the Stock Market.
|Equity Intraday||0.025% on the sell side|
|Equity Delivery||0.1% on Buy & Sell|
|Equity Future||0.01% on the sell side|
|Equity Options||0.05% on the sell side (Premium)|
|Currency Futures/Options||No STT|
|Commodity Futures||0.01% on the sell side(Non-Agri)|
|Commodity Options||0.05% on the sell side|
- This is charged only on the sell side for intraday and F&O trades.
- It is charged on both sides for delivery trades in equity.
- There are no STT on Bonds, Currency, and Mutual funds.
Charged by exchanges (NSE, BSE, MCX) and clearing member.
- It is charged on both sides of the transaction i.e. while buying and selling.
- Charges are same for both intraday and delivery trading.
|Equity Intraday||0.00325% on TurnOver||Rs 1.50 each on buy trade & sell trade|
|Equity Delivery||0.00325% on TurnOver||Rs 1.50 each on buy trade & sell trade|
|Equity Future||0.0021% on TurnOver||Rs 1.50 each on buy trade & sell trade|
|Equity Options||0.053% on TurnOver||Rs 1.50 each on buy trade & sell trade|
|Currency Futures||0.00135% on TurnOver||NA|
|Currency Options||0.044% on TurnOver||NA|
|Commodity Futures||Non-Agri: 0.0036%|
|Commodity Options||0.05% on the sell side|
The tax levied by the government on the services rendered. 18% of (brokerage + transaction charges).
Charged at Rs.15 per crore by Securities and Exchange Board of India for regulating the markets.
The stamp duties are charged by the State Government. Different states have different stamp duty. Depending on the state of the client's correspondence address this tax is applied.
Visit State wise Stamp Duties for more details.
- There are two stock depositories in India- NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited).
- Whenever you buy a share, it is kept in an electronic form in a depository. For this service, the depositories charge some fixed amount.
- DP (Stock Broker) acts as a linkage between the depository and the investor, as the investors cannot approach depository directly. So, the depository charges the depository participant and then the depository participant (DP) charges the investors.
- DP charges are a flat between Rs 10 to Rs 35 depending on your broker and this is also charged only for delivery trading (not for intraday).
In addition to all these taxes, most important tax to understand for a trader/investor is the Capital Gain Tax.
- There are two types of Capital gain taxes – Short-term capital gain tax and Long-term capital gain tax
- When you sell a stock before 1 year of buying, then it is considered as a Short-term. Here a flat 15% of the profit is charged as a short-term capital gain tax.
- When you sell a stock after 1 year of buying, then it is called a long-term capital gain tax. There is no tax on the long-term capital gain.
- For a short-term capital gain tax, the delivery trader has to pay flat 15% and it doesn’t matter what tax slab they are in. But this doesn’t apply to an intraday trader as they have to pay capital gain tax according to their tax slab.
Hence, charges and taxes are a very important part of trading and should not be ignored. You might think that you gaining profit, however, the real profit is the one which is left after deducting the charges and taxes. I hope the traders will keep this in mind before trading the next time.
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