Most of the traders and investors always find very hard to understand their contract note (trade bill) just because there are 6 different charges you pay on stock trading apart from normal broker commission.

In this article, we will discuss all that taxes and charges you pay along with your normal brokerage charges.

Also, we will go through an example of intraday trade and delivery trade for smooth and easy understanding.

This article takes only 5 to 10 minutes for understanding and after reading you will totally cop-up with your trade contract note which you always find confusing.

Applicable Charges on Stock Trading

Apart from brokerage, there are different charges applicable to your share transaction. I will explain all that charges one by one in very simple language.

(1) Goods & Services Tax (GST)

GST is applicable to your brokerage as well as to transaction charge and that is 18% of your intraday or delivery brokerage.

(2) Security Transaction Tax (STT)

For the Intraday transaction, STT is 0.025% on total volume (Share quantity * Share price) applicable, only on the sell-side.

For the Delivery transaction, STT is 0.1% on total volume (Share quantity * Share price) applicable, on buy-side and sell-side.

(3) Stamp Duty Charges

This charge is taken by the state government. So, every state in India has a different stamp duty charge.

This charge is applicable to your total volume (Share quantity * Share price).

Stamp duty charges are applicable on both sides of the transaction. Means Buy-side and Sell-side.

(4) Transaction Charges

The transaction charge is taken by stock exchanges (NSE/BSE) on both sides of the transaction that means the Buy-side and Sell-side.

The transaction charge is applicable to total volume (Share quantity * Share price).

If your transaction is done through NSE then, 0.00325% applicable on Buy and Sell transaction while if your transaction is done through BSE then 0.00275% applicable on Buy and Sell transaction.

Also, you have to note that GST is applicable to Transaction charges.

(5) SEBI Turnover Charges

These charges charged by the Security & Exchange Board of India (SEBI, a Regulatory of Indian Stock Exchange).

For Intraday and Delivery transaction this charge is 0.002% on your total volume (Share quantity * Share price). This charge is applicable to Buy-Side as well as Sell-side.

(6) DP Charges

These charges applied by Depository. In India, there are two Depositories.

• NSDL (National Securities Depository Limited)
• CDSL (Central Depository Services Limited)

These depositories collect DP charge from Depository Participants (i.e. your broker or sub-broker) and your broker or sub-broker takes that charge from their customer (i.e. you)

DP Charge is applicable only on delivery trade not on intraday trade. Also, you have to note that, this charge varies broker by a broker but normally it’s a range between Rs. 15 to  Rs. 35.

So, now you are aware of all the charges applicable to your share transaction. But for easy understanding let us take an example for Intraday as well as Delivery Trade.

Also Read: What is SEBI? It’s Functions, Entities & Responsibility

Examples

(1) Intraday Trade Example

Brokerage

So, 2 Rs. (Buy Side) + 2.1 Rs. (Sell Side)  =

4.10 Rs is the only Brokerage

Now we calculate different charges pay on above transaction.

GST charges

18% GST is applicable to Brokerage.

So, 18 % * 4.10  = >   18/100 * 4.10  

= 0.738 Rs. GST charges

Security transaction tax (STT)

On Intraday transaction STT applicable only on sell side and that is 0.025% on total volume

So, 0.025 % * (10*1050) => 0.025/100 * (10500)

= 2.625 Rs. STT

Stamp duty charges

This charge is applicable by state government and Yogesh is from Gujarat so Stamp duty is 0.002% on total volume.

So, 0.2 + 0.21

= 0.41 Rs Total Stamp Duty Charges

Transaction charges

This is charged by stock exchange (NSE/BSE) on intraday and delivery transactions. For NSE this charge is 0.00325% on total volume.

So, 0.325 + 0.34125 = 0.66625 Rs.

GST (18%) is also applicable to Transaction Charges

So, 18% * 0.66625 => 0.1199925 Rs.

So,0.66625 + 0.1199925

= 0.7862425 Rs.Total Transaction charge with GST

SEBI turnover charges

SEBI charged 0.002% on the volume of your transaction whether it is intraday or delivery. It is applicable to the buy-side and sell-side also.

So, 0.2 + 0.21

= 0.41 Rs Total SEBI Turnover Charges

DP charges

Now you know that DP charge charged by your broker and that is approx. between rs.15 to rs.35. This charge is applicable only to the Delivery transactions.

So, Here DP charge is 0 rs because this is the intraday transaction.

Now, we have all the applicable charges.

            4.10 Rs (Only Brokerage Charge)

+             0.738 Rs. (GST charge)

+             2.625 Rs. (STT)

+             0.41 Rs (Total Stamp Duty Charge)

+             0.7862425 Rs. (Total Transaction charge with GST)

+             0.41 Rs (Total SEBI Turnover Charge)

+             0 Rs (DP Charge)

                9.0692425 (Total Brokerage with all Taxes)

Total profit/loss on this transaction to Yogesh

Sell-side Volume – Buy-side Volume = Profit/Loss

10500 – 10000 = 500 Rs

500 – 9.0692425 = 490.9307575 Rs. (Take Home)

So, Yogesh earns Rs.490.9307575 after deducting all taxes on the intraday transaction.

(2) Delivery Trade Example

Brokerage

So, 20 Rs. (Buy Side) + 21 Rs. (Sell Side) 

= 41 Rs is the only Brokerage

Now we calculate different charges pay on above transaction.

GST charges

18% GST is applicable to Brokerage.

So, 18 % * 41 = >   18/100 * 41  

= 7.38 Rs. GST charges

Security transaction tax (STT)

On Delivery transaction STT applicable only on buy & sell side and that is 0.1% on total volume

So, 10 + 10.5

= 20.5 Rs Total STT

Stamp duty charges

Applicable only by the state government and Mahesh is from Gujarat so Stamp duty on the delivery transaction is 0.01% on total volume.

So, 1 + 1.05

= 2.05 Rs Total Stamp Duty Charges

Transaction charges

This is charged by stock exchange (NSE/BSE) on intraday and delivery transactions. For NSE this charge is 0.00325% on total volume.

So, 0.325 + 0.34125 = 0.66625 Rs.

GST (18%) is also applicable on Transaction Charges

So, 18% * 0.66625 => 0.1199925 Rs.

So,0.66625 + 0.1199925

=0.7862425 Rs.Total Transaction charge with GST

SEBI turnover charges

SEBI charged 0.002% on the volume of your transaction whether it is intraday or delivery. It is applicable to buy-side and sell-side also.

So, 0.2 + 0.21

= 0.41 Rs Total SEBI Turnover Charges

DP charges

Now you know that DP charges charged by your broker and that is approx. between rs.15 to rs.35. This charge is applicable only to the Delivery transactions.

Here we assume that DP charge is 15 rs.because this is a delivery transaction.

Now, we have all the applicable charges.

            41 Rs (Only Brokerage Charge)

+             7.38 Rs. (GST charge)

+             20.5 Rs. (STT)

+             2.05 (Total Stamp Duty Charg)

+             0.7862425 Rs. (Total Transaction charge with GST)

+             0.41 Rs (Total SEBI Turnover Charge)

+             15 Rs (DP Charge)

                 87.1262425(Total Brokerage with all Taxes)

Total profit/loss on this transaction to Mahesh

Sell-side Volume – Buy-side Volume = Profit/Loss

10500 – 10000 = 500 Rs

500 – 87.1262425 = 412.8737575 Rs. (Take Home)

So, Mahesh earns Rs. 412.8737575 after deducting all taxes on the delivery transaction.

So, Dear readers, we have seen 6 different charges you pay on your stock trading along with normal brokerage with example in very simple language.

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