Posted on 19th Apr 2016
This is the total trading charges that a client has to bear for trading in equity,derivative,commodity or currency. It is calculated by sum up all the taxes and charges that is levied on top of your brokerage. The charges and taxes are Transaction Charges, STT or Securities Transaction Tax, Service Tax, Stamp Duty and SEBI Charges.Brokerage
Brokers are free to charge brokerage against the services they offer to their clients as per their business model.There is no minimum limit but there is maximum limit of 2.5%. No broker can charge brokerage higher than this. Usually,full service brokers charge in % basis while discount brokers charge a flat fee irrespective of volume of trade or charges a fixed monthly fee. Depending on brokerage, customer need to pay service tax.SEBI charges
SEBI or Securities and Exchange Board of India charges for purchase and sale transactions of securities in India. It is fixed charge of Rs 20/crore or 0.0002% for equity delivery,intraday,derivative and currency F&O. There is no SEBI charges on commodity.Exchange Transaction charges
It comprises of two charges viz turnover charges plus clearing charges. Turnover charges is a fee levied by Stock exchanges like NSE, BSE and MCX for trade executed through them. It varies with segment and stock exchanges. Clearing charges are the charges which broker pays to professional clearing members to clear the trade. Broker charges both of it to the clients to pay it off.
As the name implies this is the tax imposed on transactions in stock, index options and futures. It is not charged on bond, currency and mutual fund. STT varies for Equity (Cash) and F&O transactions. For delivery based trading, it is charged on both purchase and sale side. For intraday and F&O segment, it is only charged on sell side.
STT on commodity is called CTT or Commodity Transaction Tax. CTT is not applied on certain agro commodities but it is applied on all non agro commodities like gold, silver and non-ferrous metals such as copper and energy products like crude oil and natural gas.
Stamp Duty is the State Government tax levied on instruments and documentation. The levy of stamp duty is a state subject and thus the rates of stamp duty vary from state to state. In Maharastra, it is .01% for equity delivery and .002% for derivatives.The broker charged the stamp duty from the state which he issues the contract notes from and not from the state you lives in.Service Tax
Service tax is levied on all services provided in India. The new service tax rate is 15% in India. For securities transaction, it is calculated on brokerage charges plus transaction cost.
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