When you trade in a stock exchange through a broker, the money that you need to pay is made up of two components-the price of the stock and the fee charged by the intermediary. We have a number of charges and taxes levied on trading in the stock market.
Every stock broker is different when it comes to what fees they charge to trade in the stock market. Being aware of these trading costs before opening your account is important for managing returns in your portfolio, as excessive fees can seriously cut into your returns.
In this article, we have explained and covered almost all major charges that are levied by stock brokers when it comes to trading and investing in the stock market. Your stock broker helps you to facilitate the trade through their trading platform.
Brokerage fee
When you trade in the stock market, your broker charges you a fee as his commission for the services rendered.
Brokerage fee varies from broker to broker. Most of the stockbrokers are charging discounted rates of fee in comparison to full service brokers.
To know how brokerage fees are charged by different brokers, you can read our article on brokerage charges.
Securities transaction tax (STT)
Securities transaction tax is levied by the central government when transacting in the stock exchange.
STT is charged on both buy and sell sides when you trade in equity delivery. For intraday trading it’s charged on the sell side.
For more detail, you can refer to our article on securities transaction tax.
Transaction Charges
On the value of your transaction, all the stock exchanges charge you a percentage on the value of trade as their turnover charges.
As on today, for both equity intraday and delivery, NSE and BSE charge 0.00345% per trade on buy and sell as transaction charges.
In case of equity futures its 0.002% and options its 0.053% (on premium).
For currency futures NSE charges 0.0009% and BSE charges 0.00022%. In case of currency options NSE charges 0.035% and BSE charges 0.001%
DP (Depository participant) charges
Your depository (NSDL/CDSL) and stock broker charge you DP (Depository participant) charges when you sell stocks from your Demat account. In general, it varies from broker to broker.
To know more about DP charges you can read our article on Demat transaction charges in the stock market.
Stamp charges
Stamp charges are collected by the Government of India as per the Indian Stamp Act of 1899 for transacting in instruments on the stock exchanges and depositories.
GST
Goods and services tax is levied by the government of India. You will be charged at the rate of 18% on various charges including brokerage, DP charges and transaction charges. Your broker will collect this amount and pay it to the government.
SEBI charges
Securities and Exchange Board of India charges Rs. 5 per crore on your transaction for regulating the markets. Your traded amount will be multiplied by the fraction of Rs. 5/1crore.
Call and Trade
It’s a charge levied when you place an order through a broker’s support or dealing desk. In general they charge you Rs. 50 per order.
Pledging charges
When you pledge your stock for margin, your broker will charge you pledging charges. This fee varies from broker to broker. You need to contract your broker to know how much they charge for pledging and un-pledging stocks.
Account maintenance charges (AMC)
Almost all brokers charge you an annual fee towards maintenance charges. Few brokers split this amount and collect it every quarter as annual maintenance charges. In general discount brokers charge you Rs 300 to Rs 350 as annual maintenance charges.
Payment gateway charges
Most of the discount brokers have facilitated UPI based transfer of funds with zero charges. Howrevder, if you do net banking transfer, they might charge you payment gateway charges. It varies from broker to broker. In general they charge you between Rs 9-10 plus GST for internet banking transfer.
Account opening charges
It’s a charge levied when you open a trading account with your broker. Most of the discount brokers charge you zero account opening charges.
Before opening your trading and demat account, it’s always better to know the charges that your broker might levy on you for different services. We might have missed out certain charges that a broker can levy, therefore, you are requested to contact your broker or visit their website to know more about the charges.
The amount you pay towards these fees to trade through your stock broker matters because these fees can take a bite out of your investment earnings. The more frequently you trade, the more you could pay in fees.
Therefore, choose your stock broker wisely.
