Published on Thursday, November 20, 2014 by Chittorgarh.com Team | Modified on Saturday, August 27, 2016
Brokers are middleman or agents who help us in buying and selling shares, derivatives (Futures and Options) and other financial instruments. Brokers charge a fee called brokerage for the service they offer.
But brokerage is not the only fee customers have to pay. The total amount paid to the stock/commodity brokers is made of multiple charges, fees and taxes. This includes:
The fee brokers charges for the service they offer. Each broker has its own brokerage model. While traditional brokers charge the brokerage in % of trade amount; the discount brokers offers flat monthly or per trade fee.
Transaction charge is a fee charged by broker. They are the largest part of brokerage paid. Transaction fee is addition of two charges.
Transaction charge = Exchange Turnover Charges + Clearing Charges
Visit Transaction charges are explained for more detail about transaction charges
The tax payable on the value of securities transacted through a recognized stock exchange. This is charged only on the sell side for intraday and F&O trades. It is charged on both side's for delivery trades in equity. There are no STT on Bonds, Currency and Mutual funds.
|Segment||STT Tax Rates|
|Equity Delivery||0.1% on both Buy and Sell|
|Equity Intraday||0.025% on the Sell Side|
|Equity Future||0.01% on Sell Side|
|Equity Options||0.017% on Sell Side(on Premium)|
|Currency Futures||No STT|
|Currency Options||No STT|
|Commodity||0.01% on Sell Side (Non-Agri)|
Commodity Transaction Tax (CTT) is a tax levied on exchange-traded commodity derivatives in India. Agricultural commodities are exempted from CTT but there are taxes on non-farm commodities or non agro like gold, silver and non-ferrous metals such as copper and energy products like crude oil and natural gas.
Stamp Duty on securities transactions is the tax levied on documentation by the state governments in India. Stamp duty varies by state to state charged by in which state you live. i.e. In Bangalore it is charged at .01% or Rs. 50 per contract note whichever is lower.
Service Tax is a tax imposed by Government of India on services provided in India. Service tax on securities transactions is charged at 15% of the total cost of brokerage plus transaction charges.
|Segment||Service Tax Rates|
|Equity Delivery, Intraday, F&O||15% on Brokerage + Transaction Charge|
|Currency F&O||15% on Brokerage + Transaction Charge|
|Commodity||15% on Brokerage + Transaction Charge|
SEBI, Securities and Exchange Board of India he regulator for the securities market in India charges a fee for all sale and purchase transactions in securities other than debt securities.This is charged at Rs 20 per crore.
|Segment||SEBI Turnover Fee Rates|
|Equity Delivery, Intraday, F&O||0.0002% (Rs 20 per Crore)|
|Currency F&O||0.0002% (Rs 20 per Crore)|
|Commodity||0.0002% (Rs 20 per Crore)|
The above fees or charges are provided in detail in form of Contract Note by the broker.
Contract note, a document sent by broker to the client at end of trading day to provide detail about the transaction with the broker.
This document include detail of buy & sell transactions for the day, brokerage charged, other fees or charges applied and total amount due to customer.
Broker provides an electronic copy of contract note (in pdf format) for free and charge additional amount to send a paper copy by mail. One contract note is send to customer every day; which include all the transactions for the day with the broker.
Here is a 'Contract Note Sample' which shows all these charges:
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