Chapter 9.6:Cost of intraday trading: Brokerage, fees and charges

Intraday trading involves buying and selling a set of shares on the same day. The cost the trader has to pay to execute these trades include:

  1. 1. Securities Transaction Tax (STT)
  2. 2. SEBI Regulatory Fee
  3. 3. Transaction Charges
  4. 4. Stamp Duty
  5. 5. Brokerage & GST on Brokerage

Let us look at each of the components in a little more detail.

Securities Transaction Tax (STT):

STT = 0.025% of (number of shares sold * share price)

The government of India levies Securities Transaction Tax on the trade of equities, according to the Security Contracts (Regulation) Act, 1956. Currently, a tax of 0.025% of the transaction value is applicable on the sell side of an equity intraday transaction.

SEBI Regulatory Fees:

SEBI Regulatory Fees: 0.0002% of (number of shares * share price)

SEBI or Securities or Exchange Board of India is the market regulator in India and is responsible to safeguard the interests of investors in the Indian Stock Market. Beginning January 1, 2007, SEBI introduced “SEBI Regulatory Fee” to be charged by all the registered stock exchanges in India. This fee will be utilized to meet the expenses that SEBI incurs in performing its duties. The SEBI charges currently stand at Rs. 20 per crore of transaction, i.e. they are charged at 0.0002% for each equity transaction. The rate remains the same regardless of it being a delivery or an intraday transaction.

Transactions Charges:

BSE charges: 0.00275% per transaction   NSE charges: 0.00325% per transaction

These charges are levied by the exchange on which the trade is made. Stock Exchanges in India are privately owned businesses and Exchange Transaction Charges are arguably their biggest source of revenues. These vary from exchange to exchange. BSE charges Rs. 2.75 per lakh whereas NSE charges Rs. 3.25 per lakh on turnover for equity transactions.

Stamp Duty:

Stamp Duty: Varies with location

Every contract requires to be stamped as per regulations laid out by state governments. The stamp duty varies based on the registered correspondence address of the trader.

Brokerage & GST on Brokerage:

Brokerage fees: 0.03-0.05% of transaction value or a flat fee; Nil for FIT customers

Brokerage is the fee charged by your broker for the services offered by them. This varies from broker to broker.

Broadly speaking, brokers can be categorized into two groups: full-service and discount brokers.

Full-service brokers are traditional brokers who tend to charge a higher brokerage as they promise to share tips on the stock market as well. A discount broker, on the other hand, provides a no-frills access to the trading terminal and thus, charges a much lower brokerage.

Typically, a full-service broker charges between 0.03% to 0.05% of the transaction value as brokerage along with a minimum fee of around Rs. 30 per transaction. Discount brokers, meanwhile, usually charge a flat fee per transaction.

On an average, an intraday trader pays Rs. 220 per day to the broker as brokerage charges. However, if you sign up for Free Intraday Trading with Kotak Securities, forgo all brokerage charges for intraday transactions. All you have to pay is an annual fee of Rs. 999 and keep all the profits you make on your trades to yourself. Click here to view Kotak brokerage fees.

With Kotak, you also get an option to convert to delivery at very nominal charges.

Want to sign up for Free Intraday Trading with Kotak Securities? Open your trading account to start trading now!

Read to understand why you should also invest in equity

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