All charges, fees and taxes in Stock market trading.
While investing in the Stock market. These are charges you must know :-
At the time of buying or selling shares, one is required to transact through a broker. There are various types of costs involved in such transactions and it is essential to understand these so as to assess the correct cost.
Brokerage fee
This fee is charged by the stock broker to the investor for the transaction at a fixed rate as per the contract price or as agreed between both the parties. This fee includes the cost of the broker’s services and other related expenses, which are determined based on the various benefits and services offered to the investor. There may also be additional fees and taxes included, which have to be paid by the investor.
Securities transaction tax
This charge is essentially levied in percentage. The STT rate for delivery-based equity share trades is fixed at 0.1% of the transaction value. This means that if you buy or sell any equity shares on delivery basis, you will have to pay STT at this rate.
Stamp duty and GST
Stamp duty is levied by the state government because security is transferred from one party to another in a transaction. GST (central and state) is applicable as a percentage of brokerage, the current rate of which is 9% CGST and 9% SGST. This charge helps to enhance the safety and confidence of investors in the stock market and ensures financial control.
Transaction charges
Stock exchanges charge transaction fees on purchase and sale of shares at a rate determined by the respective stock exchange. This includes a turnover fee of 0.0002% levied by SEBI, which aims to support wider transactions with greater transparency. This fee helps in making market operations smooth and reliable and provides security and confidence to investors.
Depository Participant
Depository Participants (NSDL/CDSL) levy these charges to ensure the safety of investor’s securities. These charges include operational expenses, security protocols, use of technical equipment and protection of various technical security information. Apart from this, these charges also act as a solace for investors, making them feel safe and secure in their securities.
Capital gains
Depending on the holding period, the gains from the sale of shares are taxed. Gains from the sale of shares held for less than a year come under STCG, while gains from the sale of shares held for a year or more come under LTCG. Additionally, the status of taxes levied on market gains is regularly updated from time to time to take into account government policies and review perspectives. This helps ensure that investors receive the right messages to understand their investment strategy and holding process.
One point to be noted
As most of the charges mentioned above are fixed, one can compare the above charges levied by different brokers before choosing between a discount broker or a full-service broker. It is also important to evaluate the reliability of these fees, the quality of the services, and the support capability of the broker. Investors must keep in mind the importance of choosing the right broker according to their needs and financial goals.
