Chapter 6- Lists of Charges and Taxes In Stock Market
Updated: Apr 10, 2021
While trading in the share market, it becomes essential for you to know about the various charges and taxes regarding the stock market including the brokerage charges also. First of all, you have opened a trading and a Demat account. Once you opened it, you are all set to trade in the stock market. But, these trades will be constituted of various charges. Some of them are very popular like Brokerage Charge, GST. But these are not the only charges which will deploy. There are many other taxes and fees that investors are not aware of.
So let’s dig into this and learn about the various charges involves in trading the shares. These include: -
Brokerage – The most common charge every investor should have aware of is brokerage charges. It is a fee or commission charged by a broker. They charge this brokerage for services like purchase, delivery, consultation. These brokerage charges may vary from brokers to brokers. Some broker like Zerodha, they charge zero brokerage for equity delivery (If you hold your shares after T+2 days). But these charges may change shortly as per the SEBI and government regulations.
STT – It is the tax charged by the government when a transaction occurs on exchange. It will charge on both the buy and sell-side for delivery. It will be charged only on the sell-side when the trade is in Futures and Options or Intraday. In the case of Bonds, Mutual Funds, and Currency, there are no STT charges.
Exchange Transaction charges – It is charged by the stock exchange for using his platform on the value of our transaction. It acts on both the buy and sell-side. This charge is the largest part of the price of trading with discount stock brokers.
GST – It is imposed by the Government of India on services provided in India. It is 18% of (Brokerage + Transaction Charge).
SEBI Charges – It is charged by the SEBI. It charges on both sides of the transaction i.e. while buying or selling. The SEBI charge is the same for all the segments like equity intraday, delivery, F&O trading. This is charged at Rs 5 per Crore.
Stamp Duty Charge – It is taken by the state governments in India. Nowadays, different stamp duty charges are applied at different states as per the Stamp Duty Act, 1899 on the transaction occurring in the stock exchange. From 1 July 2021, the government has marked to replace the current system of stamp duty with the new uniform stamp duty rates in shares, bonds, debentures, F&O (Futures and Options).
DP charges – It is charged by the depositories (CDSL, NSDL). It acts when we sell the stock. It is a flat fee irrespective of the sold quantity. This is charged by the depository (CDSL, NSDL) and depository participants (Brokers)
Account Maintenance charge – These fees are charged by the broker to maintain our accounts. It is charged to maintain our Demat account. Some broker offers zero annual maintenance charges while charges few bucks. This is varied from brokers to brokers. In some cases, Discount brokers charge fewer charges as compared to full-service brokers.
To conclude this article, I would like to tell you that charges and taxes are a too important part of the trading and you should not pass over it. You have to pay some amount of money for the buying and selling of the shares. You must be aware of various charges involves in the transaction and you cannot avoid these charges.