What are different charges for the Stock Market?

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Ever wonder why your profits are not what you expected, even though you timed your trades correctly? You are responsible for several costs before your profits are transferred. These stock market charges can make your profits slightly less than you expected.

 

Brokerage

Brokerage fees are typically a fixed percentage on the transaction amount. This percentage is different for intraday trades and delivery-based trades.

Intraday trades refer to trades in which a stock is purchased and sold simultaneously and are not delivered to your trading account. Intraday trades usually cost between 0.02% to 0.08% depending on the trade size.

Delivery-based trades refer to trades in which you plan to hold shares for longer than one day and have them delivered to you a Trading account. The broker charges delivery-based trades at the transaction size can be between 0.1% to 0.6% in the share market.

Securities Transaction Tax

The STT must be paid every time you purchase or sell securities on an Indian stock exchange. It applies to transactions that involve stocks, equity mutual funds, or derivatives. Every trade you make in these instruments will result in your broker automatically deducting the STT.

STT is exempt for commodities, currencies, and securities that are bought or sold on exchanges other than those listed. The applicable STT rate varies from transaction-to-transaction. This is stated in the contract note your broker provides you after the trade has been executed. It is 0.1% of the transaction value for delivery-based stock trades.

Goods and Services Tax

This tax is added to the brokerage fees paid by your broker to execute a trade. The brokerage fee is 18% plus GST.

Stamp Duty

This is the most common cost associated with stock market investments and it is charged on the transfer value of shares. The stamp duty for stock market differs from one state to the next. It is charged on the total turnover. This tax is charged on both the selling and buying sides.

Transaction fees

Transaction charges, which are charged by stock exchanges on both trading sides, is another cost. It is the same for intraday as delivery trading. NSE and BSE charge transaction fees of 0.00325% and respectively 0.00275% for total turnover amounts.

SEBI turnover fees

SEBI turnover fees are charged on both sides of transactions. They apply to equity intraday trading, options trading and delivery futures trading. SEBI turnover fees equal 0.0002% of total turnover

Depository participant charges

India has two stock depositories: the National Securities Depository Limited and Central Depository Services Limited. These depositories will charge DP fees to ensure that your transactions are kept in electronic format.

The stock depositories do not charge traders or investors directly, but the participant in the depository who happens to be your brokerage or Demat account company. You are then charged by the depository participant.

 

The bottom line

Profit is the difference in the amount that you have earned and the amount you have paid. This includes all costs associated with the transaction. Remember to include brokerage fees, STT, and other costs when calculating your trading profit.

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