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In this article we are going to discuss the total charges that a trader needs to pay while performing a trade. There are two parts to this - one is the brokerage charged by the broker and the other is charges and taxes. Exchange Transaction Charges, STT or Securities Transaction Tax, GST, Stamp Duty, and SEBI Charges are part of other charges levied on trading and investing across segments.
Total brokerage on trading and investing is the sum of brokerage charges, Exchange Transaction charges, STT, Stamp Duty, SEBI charges, and GST (Brokerage + Exchange transaction 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
There are some brokers who charge you absolutely no brokerage with their fixed monthly trading plans. The plan charges a fixed monthly fee from traders and allows brokerage-free trading. other charges will be still applicable to your trade.
SEBI or Securities and Exchange Board of India charges for buy and sell transactions of securities in India. It is the same across all brokers be it discount brokers or full-service brokers.
It is the fixed charge of Rs 10/crore or 0.0001% of equity delivery, Intraday, derivatives, and currency F&O.
Check out the SEBI charges for trading on BSE, NSE, and MCX;
It comprises of two charges turnover charges and clearing charges. Turnover charges are a fee levied by Stock exchanges like NSE, BSE and MCX for trade executed through them. It varies by segment and stock exchange. Clearing charges are the charges which broker pays to professional clearing members to clear the trade. The broker charges both of them 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 bonds, currency and mutual funds. STT varies for Equity (Cash) and F&O transactions. For delivery-based trading, it charged on both the buy and sell side. For the Intraday and F&O segment, it is only charged on the sell side.
STT on the commodity trading is called Commodity Transaction Tax (CTT). 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 current GST rate is 18% in India for trading. For securities transactions, it is calculated on brokerage charges plus transaction costs.
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