Understanding Stock Trading Charges
When you buy or sell stocks in India, you incur various charges beyond just brokerage. Understanding these charges helps you calculate your true trading costs and net profits.
Types of Trading Charges
1. Brokerage
Fee charged by the broker for executing trades. Zerodha pioneered zero brokerage for delivery and flat ₹20 for intraday/F&O.
2. Securities Transaction Tax (STT)
Government tax on stock market transactions. STT rates were revised from 1st October 2024:
- Equity Delivery: 0.1% on both buy and sell
- Equity Intraday: 0.025% on sell side only
- Futures: 0.02% on sell side (increased from 0.0125%)
- Options: 0.1% on sell side premium (increased from 0.0625%)
3. Exchange Transaction Charges
Fee charged by NSE/BSE for using their trading platform:
- NSE Equity: 0.00297% of turnover
- NSE Futures: 0.00190% of turnover
- NSE Options: 0.053% of premium
4. SEBI Charges
Regulatory fee charged by Securities and Exchange Board of India at ₹10 per crore of turnover.
5. Stamp Duty
State duty charged on buy side only:
- Equity Delivery: 0.015%
- Equity Intraday: 0.003%
- F&O: 0.002-0.003%
6. GST (Goods and Services Tax)
18% GST is charged on brokerage, exchange transaction charges, and SEBI charges.
7. DP Charges (Depository Participant)
₹15.34 per scrip charged when you sell shares from your demat account. This includes ₹9.50 (Zerodha) + ₹3.50 (CDSL) + ₹2.34 (GST).
Impact of STT Increase (Oct 2024)
The Union Budget 2024 increased STT on F&O transactions:
- Futures STT increased from 0.0125% to 0.02% (60% increase)
- Options STT increased from 0.0625% to 0.1% (60% increase)
This significantly impacts F&O traders, especially options traders who trade frequently.
Frequently Asked Questions (FAQs)
Why is Zerodha brokerage zero for delivery?
Zerodha pioneered the discount broking model in India. They charge zero for delivery trades and make money from intraday/F&O brokerage, account fees, and margins. This has made investing accessible to millions.
What is the breakeven point for a trade?
Breakeven is the minimum price movement needed to cover all trading charges. For delivery trades, breakeven is typically 0.2-0.3% of trade value. For intraday, it's lower due to lower STT.
Are charges same for all brokers?
STT, stamp duty, SEBI charges, and exchange charges are same for all brokers as they're statutory. Only brokerage varies. Traditional brokers may charge 0.1-0.5% brokerage while discount brokers charge flat fee or zero.
How to reduce trading costs?
1) Trade less frequently (reduces brokerage, STT), 2) Use delivery for long-term (lower STT than options), 3) Choose discount brokers, 4) Avoid small trades where fixed costs are high percentage.
Is DP charge per transaction or per scrip?
DP charge is per scrip (stock), not per transaction or quantity. Whether you sell 1 share or 1000 shares of Reliance in a day, DP charge is ₹15.34 for that scrip.