In this article we are going to discuss total charges which a trader needs to pay while performing a trade. There are two parts of this - one is the brokerage charged by the broker and the other is charges and taxes. Transaction Charges, STT or Securities Transaction Tax, GST, Stamp Duty, and SEBI Charges are the part of other charges.
Brokerage is the fee charged by the broker for trading. There is no minimum limit, but there is a 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 the volume of trade or charges a fixed monthly fee.
SEBI or Securities and Exchange Board of India charges for buy and sell transactions of securities in India. It is the fixed charge of Rs 10/crore or 0.0001% of equity delivery, Intraday, derivatives and currency F&O.
For commodities, it is charged as follows
Commodity Futures - Rs 1/crore for AgriRs 10/crore for non-agri
It comprises of two charges turnover charges and clearing charges. Turnover charges is a fee levied by Stock exchanges like NSE, BSE and MCX for trade executed through them. It varies by 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 charged on both buy and sell side. For Intraday and F&O segment, it is only charged on the sell side.
STT on commodity is called CTT or Commodity Transaction Tax. CTT does not apply to certain agro commodities, but it does apply to 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. With the recent changes by SEBI, unified stamp duty will be charged across the country. Stamp duty is charged per contract note and based on traded volume. The new stamp duty would be charged only on the buy-side of the transaction. Stamp duty will be charged on Off-market transactions as well. Read Stamp Duty Rates
GST is levied on all services provided in India. The new GST rate is 18% in India for trading. For securities transaction, it is calculated on brokerage charges plus transaction cost.
Last updated on 2nd Feb 2020