Everything About Smallcase Fees and Charges

Smallcases are the latest way to undertake stock investments. A smallcase refers to a strategic portfolio of stocks/ETFs grouped together involving a thematic or strategic objective. It helps you to build a diversified, cost-effective and long-term portfolio.

Smallcase Fees and Charges

There are two types of smallcase charges:

Subscription Fee

Subscription charges must be paid to the smallcase managers conducting the research. Many smallcase platforms do not charge any subscription fee, so you are free to access those smallcases. Thus, it is entirely at the discretion of the smallcase manager to have subscription charges for the smallcases offered.

Smallcase Transaction Fees

This refers to charges you need to pay for your smallcase purchase.

Free Subscription: There is no subscription fee involved. For every new smallcase purchase, you have to pay a flat smallcase transaction fee for every order placed in the basket. There are no charges of smallcase for any potential orders, rebalances, repairs, or exit with the same smallcases.

Paid Subscription: Subscription fees to be paid upfront for investing a minimum amount for that particular smallcase in a basket order. The minimum investment amount in each smallcase is dependent on the stocks in that basket, for e.g. Rs. 25,000, Rs. 50,000, etc.

Note

1. For all smallcases, a one time fee of Rs 100+GST is applicable on the day of purchase (no charges for any other order placed in that smallcase).
2. Investing in smallcase does not entail any hidden smallcase charges. You need not pay any charges for mere viewing or monitoring smallcases.
3. Fixed small case fees and charges like brokerage, Demat, taxes, and other statutory charges will continue to apply.
4. If you have invested less than Rs. 4000 across any smallcases, you get charged at only 2.5% of the amount invested + GST (18% on fees).
5. Funds get debited from your trading accounts while stocks get credited in your respective Demat account.
6. Average purchase cost under your Portfolio section excludes brokerage charges. As such, the total and individual smallcase returns are exclusive of brokerage and relevant statutory charges that you pay.

Smallcase Taxation Rules

The taxation rules for smallcases, as shown below, are the same as that of equities.

• Short Term Capital Gains (STCG) - Stocks that are held for less than one year of holding period are taxed at 15% of capital gains. Tax is not applicable on capital losses.
• Long Term Capital Gains (LTCG) - Stocks held for 12 plus months since their purchase will attract tax if the capital gain exceeds Rs.1,00,000. From April 1, 2018, these gains would be taxed at 10%.
• A Dividend is taxed only in the recipient’s hands at the applicable rate. Currently, dividends on stocks in the hands of investors are tax-free for up to Rs.10 lakhs annually. Any dividend held over Rs. 10 lakhs annually gets taxed at 10% of the dividend income.

Note:

Refer to the FAQs drafted by the Central Board of Direct Taxes (CBDT) at http://incometaxindia.gov.in/News/FAQ-on-LTCG.pdf for further tax-related information.

Investing in smallcases has thus various benefits to the new age investor. Key benefits include:

• Protection against market volatility through diversification of portfolio giving long-term investment benefits and minimising stock-related risks
• Research-backed portfolios developed and managed by financial experts
• No lock-in periods. However, taxation rules apply.
• Nominal smallcase fees and charges applicable exclusive of brokerage and other statutory charges.