Different Charges on Share Trading Explained. Brokerage, STT, DP & More (Updated): There are a number of charges and taxes involved while trading in India i.e. buying or selling of shares. Some of them are quite popular like Brokerage Charge & GST, while there are many others that the traders and investors are not aware of.
In this post, I am going to explain all types of different charges on share trading. Some common ones are brokerage charges, Security transaction charges (STT), stamp duty, etc.
Anyways, before we start discussing them, let us spend a few minutes to learn a few basics things that you need to know first. So, be with me for the next 10-12 minutes to understand the explanation of all the different charges on share trading. Let’s get started.
1. Intraday Trading and Delivery
A lot many beginners trades in stocks and confuse it by investing or delivery. However, both of them are really different:
- Intraday Trading: When you buy & sell a share on the same day, then it’s called Intraday trading. For example, you bought a share in the morning and sold it before the market closes on the same day, then it will be considered as an intraday
- Delivery Trading: On contrary to Intraday, when you buy a share and hold it for at least one day, then it’s called a delivery. For example, you bought a share today and sold it after three days (or any day but today) then it will be considered as a delivery. Here you can sell the stock tomorrow, or the day after that, or a week later, a year later or 20 years later.
2. Full-Service Brokers and Discount Brokers:
- Full-Service brokers: These are the traditional brokers who offer full-service trading services in stocks, commodities, currencies, mutual funds, etc along with research and advisory, portfolio and asset management, banking all in one account. For example, ICICI Direct, Kotak Securities. HDFC securities, etc.
- Discount brokers: These are those budget brokers who offer high speed and the state-of-the-art execution platform for trading in stocks, commodities and currency derivatives. They charge a reduced commission (flat price) and do not provide trading advice. For example, Zerodha, 5Paisa, Angel Broking, Trade Smart Online, etc.
Also read: 8 Best Discount Brokers in India – Stockbrokers List 2020
In general, a full-service broker charges a brokerage between 0.03% – 0.60% of the transaction volume while trading in stocks. On the other hand, the discount brokers charge a flat fee (fixed rate of Rs 10 or Rs 20 per trade) on intraday. The majority of discount brokers also do not charge any fee on delivery trading.
It is important to note that you have to pay a brokerage charge on both sides of trading i.e. while buying a share and selling a share. Let’s take an example to understand the brokerage charge better.
Suppose there is a brokerage firm called – ABC. Now, this broker charges a brokerage fee of 0.275% on intraday trading and 0.55% on delivery trading. The total charges on both tradings can be given as-
|Intraday Trading||Delivery Trading|
|Brokerage||0.275% of total turnover||0.55% of total turnover|
|Turnover||If you buy 100 stocks at Rs 120 and sell at Rs 125, total turnover is (120*100+ 125*100=) Rs 24,500||If you buy 100 stocks at Rs 120 and sell at Rs 125, total turnover is (120*100+ 125*100=) Rs 24,500|
|Total Brokerage Cost||Total brokerage charge on Intraday trading (for both buying and selling) = 24,500 * 0.00275 = Rs 67.38||Total brokerage charge on Delivery (for both buying and selling) = 24,500 * 0.0055 = Rs 134.75|
As the competition among the brokers is continuously increasing, these brokerage charges offered by the different brokers are also decreasing.
For example, the discount brokers like Zerodha offers a flat fee of Rs 20 or 0.03% on Intraday trading (whichever is lower) and Delivery investments are FREE. Here are the Brokerage charges for different segments offered by Zerodha.
— Delivery Trading: FREE (Rs 0)
— Intraday Trading: Rs 20 per trade or 0.03% (whichever is minimum)
— Equity Futures: Rs 20 per trade
— Equity Options: Rs 20 per trade
Therefore, for the above table, assuming the same scenario, the person would be paying only Rs 7.35 in Intraday Trading and Zero Brokerage on Delivery, if he prefers Zerodha as its broker. Other discount brokers like 5Paisa, Upstox, Angel Broking, etc, also offer similar lower brokerage charges.
Now, apart from brokerage charges, there are also an additional couple of charges and taxes to be paid while share trading. As already mentioned earlier, some of them are Security transaction tax, service tax, stamps duty, transaction charges, SEBI turnover charges, depository participant (DP) charges, and also capital gain tax (which you’ve to pay at the end of the financial year but not while transacting).
Let’s understand these other different charges on share trading and taxes involved first. Further, we will also discuss an example at the end of this post to understand the charges and taxes involved better.
Different Charges on Share Trading
– Security Transaction Tax (STT)
- Apart from brokerage, this is the second biggest charge involved while trading in stocks.
- For delivery trading, STT is charged on both sides (buy & sell) of transactions and is equal to 0.1% of the total transaction price (on each side of trading).
- For intraday and derivate trading (futures and options), STT is charged only when you sell the stock. For intraday, the STT charge is 0.025% of the total transaction price while selling.
- For equity Futures, the STT is equal to 0.01% on the sell-side. On the other hand, for equity options trading, STT is equal to 0.05% on sell-side (on premium).
– Stamp Duty
Stamp duty is charged uniformly irrespective of the state of residence effective from July 1st, 2020. These new rates are only on the buy-side (and not on both buy and sell-side). Here are the new rates on stamp duty on different types of trades:
|Type of trade||New stamp duty rate|
|Delivery equity trades||0.015% or Rs 1500 per crore on buy-side|
|Intraday equity trades||0.003% or Rs 300 per crore on buy-side|
|Futures (equity and commodity)||0.002% or Rs 200 per crore on buy-side|
|Options (equity and commodity)||0.003% or Rs 300 per crore on buy-side|
|Currency||0.0001% or Rs 10 per crore on buy-side|
|Mutual funds||0.005% or Rs 500 per crore on buy-side|
|Bonds||0.0001% or Rs 10 per crore on buy-side|
Quick Note: Previously, the stamp duty was charged by the state government and hence not similar across all the states in India. A few states charged higher stamp duty, whereas a few of them charges lower duty taxes. Different states charge different stamp duty. Moreover, Stamp duty used to be charged on both sides of transactions while trading ( i.e. buying & selling) and hence are charged on the total turnover. **This rule changed after 1st July, 2020.
– Transaction Charges
- The transaction charges is charged by the stock exchanges and that too on both sides of the trading. This charge is the same for intraday & delivery trading.
- National stock exchange (NSE) charges a fee of 0.00325% of the total turnover as Transaction charges on Equity and Delivery Trading. On the other hand, Bombay stock exchange (BSE) charges a fee of 0.003% of total turnover as Transaction charges on Equity and Delivery Trading.
- For Derivatives trading, BSE doesn’t cost any transaction charges. However, on NSE, the Exchange transaction charge is 0.0019% for futures trading and 0.05% of total turnover for Options Trading.
– SEBI Turnover Charges
- SEBI stands for the Securities exchange board of India and it is the security market regulator. SEBI makes the rules and regulations on the exchanges for its proper functioning.
- SEBI Turnover fee is charged on both sides of the transaction i.e. while buying and selling and is the same for all equity intraday, delivery, futures, and options trading.
- The SEBI turnover charge is equal to Rs 10 per crore of the total turnover.
– Depository Participant (DP) Charges
- 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.
- The depositories don’t charge the traders or investors directory but charge the depository participant. Here, the brokerage firm or your demat account company is the depository participant (DP).
- DP acts as a linkage between the depository and the investor as the investors cannot directly approach the depository. In short, the depository charges the DP and then the depository participant (DP) charges the investors.
- For example, while trading with Zerodha, DP charge is equal to ₹13.5 + GST per scrip (irrespective of quantity), on the day, is debited from the trading account, i.e. when stocks are sold. This is charged by the depository and depository participant.
– Goods & Service Taxes (GST)
GST is the mandatory tax levied by the government on the services rendered and is equal to 18% of total brokerage and transaction charges.
– Capital Gain Taxes
Lastly, Capital gain taxes are the most important tax to understand in this article for the traders and investors. We are not going to cover all the details regarding capital gain taxes in this article, but just a short over. If you want to read the complete details, you can refer to this article.
- There are two types of Capital gain taxes in India – Short-term capital gain tax and Long-term capital gain tax.
- When you sell a stock before one year of buying, then it is considered as a Short-term. Here a flat 15% of the profit is charged as short-term capital gain tax.
- When you sell a stock after one year of holding, then it is called the long-term. For the long term capital gain, you have to pay a tax equal to 10% of the gains, if it exceeds Rs 1 lakh.
- For Intraday Traders, they need to pay taxes on their capital gains which depends on their tax slab. For example, if you’re in the highest tax slab and made some profits while intraday trading, you’ve to pay taxes of 30% on those gains.
Quick Note: You can also download our FREE android app of ‘Brokerage Calculator’ to find the total brokerage and actual profits/loss while trading in stocks ‘on your phone’. Here is the quick link!
Example of Different Charges on Share Trading
Now, let us see an example to understand these different charges on share trading and taxes involved better. Suppose there are two traders- Rajat and Prasad. Here, Rajat is a delivery trader who invests in the long-term i.e. for 2-3 years. On the other hand, Prasad is an intraday trader.
They both have their accounts in the same discount brokerage company named ABC. The brokerage charge for ABC is Rs 20 Per trade on intraday trading and FREE for delivery trading.
Also, let us suppose that both Rajat and Prasad have traded a total turnover of Rs 98,000 in a share (i.e. total cost involved while buying and selling). In addition, they both live in Maharastra.
Now the different charges and taxes paid by them for complete trading i.e. from buying to selling the shares can be given as-
|Prasad (Intraday Trader)||Rajat (Delivery Trader)|
|Total Turnover||Rs 98000||Rs 98000|
|Brokerage Charge||Rs 40 (Flat Rs 20 Per trade i.e. Buying & Sellling)||Rs 0 (FREE Delivery Trades)|
|STT||0.025% of sell side = 0.025 % of Rs 50,000 = Rs 12.5||0.1% on buy & sell = 0.1% of 98000 = Rs 98|
|Stamp Duty||0.003% of buy-side = 0.003% of 48,000 = Rs 1.44||0.015% of buy-side= 0.015% of 48,000 = Rs 7.2|
|Transaction Charges||0.00325% of total turnover = 0.00325% of Rs 10,000= Rs 3.18||0.00325% of total turnover = 0.00325% of Rs 10,000= Rs 3.18|
|SEBI Turnover Charges||Rs 10 / Crore of Total Turnover= Rs 0.10||Rs 10 / Crore of Total Turnover= Rs 0.10|
|GST||18% on (brokerage + transaction charges) = 0.18 * (40+ 3.18)= Rs 7.77||18% on (brokerage + transaction charges) = 0.18 * (0+ 3.18) = 0.57|
|Total Brokerage And Taxes||64.99||109.05|
|Total Profit or Loss||1935.01||1890.95|
|Capital Gain Tax||Depends on the tax Slab||Depends on Short/long term holding period|
At first glance, it looks cheap to invest in intraday as the total charges are comparatively less here. But you should note that the frequency of trading for intraday traders is quite high. Many intraday traders easily make 2-3 high volume trades every day. So, they have to pay these brokerage charges and taxes again and again. On the other hand, delivery traders or long-term investors do not make such frequent trades.
Overall, charges and taxes are a very important part of trading and should not be ignored. You might think that you are in profit, but the real profit is the one that is left after deducting the charges and profit. I hope the traders will keep this in mind before trading the next time.
Zerodha Brokerage Calculator
Before ending this article, here’s the brokerage calculator for equity trades using Zerodha, the discount broker.
Quick Note: If you’re interested in opening your demat account with Zerodha, the No 1 stockbroker in India, here’s a direct link to the account opening page.
That’s all for this post. If you’ve any doubts related to the different charges on share trading in India, feel free to comment below. I’ll be happy to help you out. Cheers & Happy Trading!
Kritesh (Tweet here) is the Founder & CEO of Trade Brains & FinGrad. He is an NSE Certified Equity Fundamental Analyst with +7 Years of Experience in Share Market Investing. Kritesh frequently writes about Share Market Investing and IPOs and publishes his personal insights on the market.
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Dear Mr. Kritesh,
Very educative article for novice. I am doing short term trading for last one year and not knowing fact taxes. When I did calculation back on my profit (What I was thought) observed no profit at all after deducting the tax at the rate of 15% on delivery trading. Your article would definitely help and assist to know the profit and whether selling the share would be profitable or not. HATS UP!!! Thank you very much!
You are welcome GopalKrishnan! I deeply appreciate the time and effort you put in writting this comment.
Sir i have gone through the guide over trade found awsm text cud help me in governing trade ahead. Thanks alot
You are welcome.
Hi, very well elaborated… But the dates of the comments are older than the dates the article was posted i.e. Feb 12, 2020…well it was great reading it
Hi Anurag. This is an updated article with old comments. Sorry about the confusion!
I am new share market..
Please guide about taxes and charges impiked on investor by giving example.
SEBI charges : ….%
Very informative indeed.
Thanks a lot for sharing this post. It gives a summary of tatal expenses incurred on one’s turnover. The post is very illustrative and well explained. I was looking for such summary of all taxes and charges and their comparative analysis for intraday and long term investment.
Very detailed article. Good work.
Great article.kindly include get also as per current tax system.thanks.god bless!
INCLUDE APPLICABLE GST RATES ON SHARE TRADING
18% GST Will be applicable on transactions compared to earlier service tax of 15%.
I am very happy to know from you about stock market
Explained in very simple words. Normally we beginners won’t give any credential to various charges and tax while looking at profit.
Charges and taxes are important and the beginner’s should ignore it. I’m glad it was helpful to you.
Yes that was helpful thank you.
Please reply my following doubt ..
1) Is it mandatory to decide wether the share is intraday or delivery before buying the stock ?
2) Some brokers are claiming of free delivery . Is it means i will not pay any brokerage for delivery stock ?
Hi Kunal. 1) There’s no need to specify whether Intraday or Delivery 2) Yes, Delivery trading is free for most discount brokers. However, there are additional mandatory charges like STT, Stamp duty, SEBI charges, etc which you have to pay while trading. Here, brokers are not charging anything. I hope it helps.
Tell etf calculator also
Surely, Well done.
A good job with good intention and thanks a lot ….
very helpful tips provided and anticipating such always!
As this was awesome article and cleared most of the doubts, but could you pls reply about what is GST per scrip in DP charges where you have written ₹13.5+GST per scrip.
Thnx in advance.
I have bought a scrip and on the 3rd day the broker informing that they are unable to deliver the same, due to short delivery and they may be credit the purchase amount to me.
NB:in those 2 days the scrip has been appreciated by about 10% (2 upper circuit)
How such cases are treated by NSE/BSE? what I understand is, any short delivery quantity will be auctioned by the exchange on the delivery day at that day’s price and will be delivered to the buyer AND the auctioned amount will be debited to the seller.
Could you please update whether the above is the right way OR any other methos is there as per BSE/NSE or SEBI norms?
Hi Kris, will look at it and get back to you soon. _Regards
sir if i puchase shares of rs 2000 @10/- per share and sale at 11/- after1 month then what will be the charges
and please share whether it is profitable or loss deal
Hi Vijay. What I get from your comment is that your Buying price= Rs 10, Selling Price= Rs 11, Quantity=2000.
Let’s assume total charges of 0.6% (Brokerage, GST, stamp duties etc) which is applicable on both sides of transactions i.e. buying and selling. (The charges will differ for discount brokers).
Therefore, charges while buying = 0.006* (20,000) = Rs 120
Charges while selling = 0.006* (22,000)= Rs 132
Now, Your net profit will be Rs 2000 (10% capital gain as the stock rises from Rs 10 to Rs 11).
Next after selling, you have to pay a short-term capital gain tax of 15% = 15% of 2000= Rs 300
Overall, you will make profit of Rs 2000 – (Capital gain taxes + charges) = Rs 1450 (Approx)
I hope it helps.
DELIVERY CHARGES TAKEN BY BROKER IS PER SHARE OR PER 100/- RS
WHAT ABOUT DP CHARGES
It’s per share. I’ve written a post explaining all about charges. You can read it here: https://www.tradebrains.in/different-charges-on-share-trading-explained-brokerage/
Why the STT and Stamp Duty are charged rounded basis and not at actuals?
Hi Kritesh, excellent articles you have written on stock market. it is really very helpful & knowledgeable articles those who are interested to invest in stock market.
Glad it’s helpful.
Hi Kritesh, Nice Article. A small suggestion is to elaborate on intraday charges based on stock price, any specific charges for after hour orders, penalty where applicable, etc..
Hi Suresh. Sure, I’ll elaborate the details in next blog post soon.
Hi.. Nice article. All types of charges nicely explained by you. Thank you for the same. I still have a query, if you could advise on the same, recently i sold my shares of about 30 companies total worth of Rs 81000/-. I received an invoice from my broker where in i was charged Rs 100 per company held be me, i.e. 30 companies x Rs 100 = Rs 3000.
NOTE: These shares were held by me for over 12 months.
Are there such charges over and above the brokerage & other charges, that the brokerage can charge its customers?
Hi Milind. I’m not aware of any such charges. Further, in any transaction, the biggest charge is brokerage- which cannot exceed 2.5% (as per SEBI guidelines). This charge is even bigger than brokerage. If you can share the invoice, I can give you a confident answer. You can contact me on facebook here.
This site is absolutely fabulous!
i m new to investing in shares…..would like to know meaning of ” pay falt Rs.20/- brokerage per lot of options”…..
Hi Mithun. I’ll explain in in simple words. Flat rates means that the brokerage doesn’t depends much on the investment amount. For example, if a full-service broker is charging 0.5% per transaction, this means that the brokerage for a transaction of Rs 10,000 and Rs 50,000 will be different- 0.5% of both the costs. However, for flat charges, the brokerage is same i.e. Rs 20 for all these transactions. I hope it helps. Cheers!
Hi Kritesh, Please guide me for query mentioned here. As per above details,
1. Broking firm will charge Rs. 20 as flat brokerage in both i.e buy and sell of stocks. Please clarify.
2. If brokerage (by 0.5%) is higher (Eg: Rs.55) than flat one as Rs.20 for both (buy/sell) then which brokerage will be applied.?
3. I am planning to open DMAT+Trading a/c. Which one is best Upstox or Baroda Bank? please help. Thanks.
Hi Abhijit, here are the answers to your questions: 1) Whenever you trade in stocks, let’s say you buy stocks worth Rs 10,000, you have to pay Rs 20 flat as brokerage charges. 2) If the broker is charging a fixed brokerage rate of Rs 20, then this is the maximum brokerage that you’ve to pay 3) Upstox is better according to me. I hope it helps.
very very informative, even being there in the same industry since last 10years never gave much attention to those charges.
Thanks a lot for highlighting those charges.
Thank you for the comment, Mr. Paresh. Glad that you liked the post. Cheers!!
Good knowledgeable article
Thank you. Glad it was helpful!!
I appreciate your efforts of educating the mass. An informative article indeed. Want to know and learn how to pick good equities for long time on monthly basis.thanks sir
You are welcome, Samtha. Please go through this blog https://www.tradebrains.in/how-to-select-a-stock-to-invest-in-indian-stock-market/, which I’m sure will be helpful to you. Cheers!!
Sir can you please confirm on STCG and LTCG tax. I read from some other sites that even LTCG are taxable as of now.
Also, is it that any amount of profit we make is taxable ? Or only if our returns are greater than 1L then it is taxable ? As in banks and FDs.
Hi Akshay, both Short term and long term gains from equity are taxable now. For short-term, the tax is 15% on the profits. For long term, the tax is 10% for profits above Rs 1 lakhs. I hope it helps. Cheers!!
This is actually useful, thanks.
You are welcome, Roberto!!
Thanks, it’s very informative
This is really helpful, thanks.
Thank you for the great article
what a good article it is. thanks so much
Nice article Mr.Kritesh Abhishek. Very much helpful for a beginners like me.
After paying all the brokerage charges, at the end of year during IT returns again we have to pay IT based on P&L. With this can you please suggest as a thumb rule if one has to sell what should be min margin so that there won’t be any loss
Thank you very much for your hardwork
Hi, Kritesh, very very informative article. Infact one stop solution for all overheads related quarries on equity trading. Till now I have been doing trading without considering these incidentals. Love you brother
Thanks for this precious knowledge for traders .keep sharing ur experiences best of luck.
You are welcome, Manish!
will it be loss if I purchase share in interval. for eg Want to purchase axis bank share-500 nos.
If purchase 100 shares 5 times and purchasing 500 nos. one time will have same charges?
Sir which one is the best for intraday as well as delivery
Zerodha or Motilal Oswal
Hi Sham. I prefer Zerodha.
Why you multiply SST, a brokerage charge with 2? If i am a buyer I am goning to pay my part, seller going to pay their part. How come both will come to buyer side?
It is a very excellent articles you have written on stock market. it is really very helpful & knowledgeable articles for the beginners and are interested to invest in stock market. Thank you!
Hi Kritesh Ji
Your explanation about various types of charges is great. Can you please suggest me some books to know about basics of Indian stock market (in hindi medium only)?
This Article was very useful. I would like to invest but confused to which one to choose (3-1 account or 2-1 account).If 3-1 which one should i choose (ICICI or HDFC) . Or if 2-1 which one should i choose (Zerodha or Upstock). Require your valuable advice. Thanks in Advance.
Hi Subhash. I’ll recommend opening 2-in-1 account and connect it with your savings account. I’ll suggest opening an account at Zerodha. However, Upstox is also a good alternative.
This proved out to be a one stop solution for all doubts. Thnks
really appreciate how deeply u explained it.
Sir you are genius!
Still some info is hidden in example of Zerodha..DP charges are not mentioned.
Ye jo b sulk hai kya usse bad 15,% tax dena padega …..or dp charge kya hota hai kya ye alag alag hota hai kitna hota hai
Thank you for gave information sir ??
What an article. It fixed in the mind. Thanks For providing information in such a proper manner.
I am looking for a freelance broker to trade my investment, what would be the industry average commission that I would need to pay him?
Excellent article i like the way you put this article with pointwise explanation thanks for sharing such an amazing article.Algo Trading
Very much helpful for beginners like me.
Your article covers all my queries.
Thanks a million! ?
In your example on the site for Total Turnover of Rs 98,000, you have calculated Transaction Charge as 0.00325% of Total Turnover of only Rs 10,000 (instead of Rs 98,000) … why so ?
In Zerodha, when you login to Reports -> PnL ..there are four fields
1) Realized Pnl,
2) Charges (STT, Stamp Duty, Charges)
3) Other credits/debits (Account Maintenance & DP charges)
4) Net Realized Pnl (1-2-3)
My query is on which amount we have to pay STCG tax?
Pl include “other charges’ as well, in your article. Since Kotak securities has few hidden charges. ‘Other charges’ are charged in contract note as well as from deposited fund with them as seen in ledger. Additionally it do not pay interest in amount lyinf with it even in Trinity account. This ‘other charge’ is illegal since it is not as per SEBI circular.
Hello sir, great explanation.
but I have one dought,
you told about dp charges around (~20rs) per scrip for delivery sell trade. But didn’t saw it being calculated anywhere in your examples.
So, also considering the dp charges per scrip isn’t is true that to be in profit, our total profits should any how be greater than 20rs (per scrip).
(my broker is upstox)
!!!!!!!! If not author anyone seeing this please do reply if you know about it !!!!!!!
thanks in advance
Hello Mr. Abhishek, I am Kasturirangan/ Nice to know that you are from Warangal REC or NIT. I am also from REC Warangal 1982 Batch Mech. Settled in Chennai. Am just starting to learn the ropes of share trading. Very interesting you are making it with your write up. I have copied it and will read it lisurely. All the best to you. If possible, pl keep in touch OUTSIDE of shares. – 94440 38897 Regards
Nice article to understand the basic concept of intraday charges. Based on that I compared my existing broker charges and then opened a new online based very low case broker’s trading account. Thanks.
It was a nice explanation of charges involved in the stock market.
May be you can add a one more field In the calculation section for capital gain tax as well, so we know how much will be the take home for that share.
Even DP charges apply for delivery
This was an extremely wonderful article. While Share Trading in the stock market you should know about the various charges, including brokerage charges. To help calculate brokerage charges, you can always use a brokerage calculator.
Could you update all rates in the calculations
Hi I am holding NRE account earning money from abroad, Is there more charges then Normal account holder of india.