Hidden Stock Brokerage Charges You Should Know

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Today in this article, we will be discussing the stock brokerage charges which you must know before starting your stock market investment journey.

Today there are many low or zero brokerage companies like Zerodha, 5 paisa, upstox, etc who are offering trading platforms at zero charges or very low charges. These platforms are useful for people who are doing intraday transactions in the stock market.

When we start trading in the stock market, the broker offers us a number of benefits and features. Some of them are like paying only ₹ 10 or 20 for intraday transactions irrespective of your trading value. The other one is zero brokerage on the buying in the cash market (taking delivery).

We got excited about these offers and enroll with the stock broker. But when we check our account statement, we will be shocked to see different charges are levied on the transactions. Usually, these charges are not disclosed or discussed in detail when you are opening your trading account with any of the brokers.

So today, we will be discussing all such hidden stock brokerage charges which you must know before you start your investment or trading journey in the stock market.

Hidden Stock Brokerage Charges

Below are the hidden stock brokerage charges which you as an investor must know. In the end, we will also discuss which are the main charges you should keep an eye on.

Before we move ahead, let’s understand the difference between delivery and intraday transactions.

Intraday: The position you hold needs to be square off at the end of the trading day.

Delivery: You can buy and hold the stock for as long as you wish.

Also, Read Demat Account Facts You must know

In intraday transactions, you will be required a less amount of capital as compared to the delivery transactions. Most of the brokers are offering margin money on intraday trade so that you can leverage that margin and buy more shares than the money you have in your trading account.

Discount brokers are charging a fixed fee for intraday transactions irrespective of the trading volume or value. And they usually charge zero brokerage for the delivery transactions.

But actually these transactions have many hidden charges which are not known to the trader/investor.

Let’s check what all charges are levied on the stock market transactions.

Intraday Transactions charges:

In intraday transactions, the full-service brokers will charge you higher brokerage charges as they are providing you the equity research reports, on-call transaction facilities and they give buy and sell calls.

Their charges would range from 0.25% to 0.50% of the transaction value.

While on the other hand, the discount broker will charge you only fix fee of ₹ 1o or 20 per transaction. These charges are irrespective of the transaction value.

Delivery Transactions charges:

In delivery transactions, the full-service broker will charge you anywhere between 0.10% to 0.70% while discount brokers will charge you zero brokerage.

A few of the examples for full-service brokers are as below.

  • ICICI Bank
  • HDFC Bank
  • Angel broking
  • Sharekhan
  • Motilal Oswal

List of the discount brokers in India.

Now let’s understand the different stock brokerage charges with an example.

Let’s say Amit has bought 100 shares of company A at a price of ₹. 200/share.

The price of the stock went up and Amit had sold his 100 shares at ₹ 400/share.

Now let’s calculate the different charges involved in this buy and sell transactions.

Buy = ₹. 20000 Sell = ₹ 40000 Total Turnover = ₹ 60000

ParticularRateCharges
Brokerage0.01% (Buy & Sell)6.00
STT0.025% (On sell)10.00
Exchange Transaction ChargesNSE – 0.000325% & BSE – 0.003%1.30
GST (On brokerage + Exch. Trn. charges)18%1.31
SEBI Turnover Charges0.0001%0.06
Stamp Duty Charges0.005% (State-wise vary)3.00
Total Charges21.67

So in our example, there is a total charge of ₹ 21.67 levied in the account statement.

Sometimes in intraday transactions, these charges are higher than the actual profit you make. So you must keep these charges in mind while selling the stock so that you at least cover your charges from the transaction.

Now let’s do the same calculation for the Delivery transaction.

ParticularRateCharges
BrokerageNil for discount broker0.00
STT0.10% (On sell)60.00
Exchange Transaction ChargesNSE – 0.000325% & BSE – 0.003%1.30
DP Charges (NSDL/CDSL)Around ₹ 20 to ₹ 30 (Per script)30
GST (On brokerage + Exch. Trn. charges)18%5.63
SEBI Turnover Charges0.0001%0.06
Stamp Duty Charges0.005% (State-wise vary)3.00
Total Charges99.99

So in the delivery transaction, the total charges would be ₹ 99.99.

So you as an investor, you must keep these charges in mind while buying or selling the stock in the stock market.

A discount broker is cheaper and good for the investor. But they also charge for other services like call and trade. They are charging around ₹ 20 to ₹ 50 for call and trade.

Moreover, if you wish to trade-in commodity then you have to open that account separately. the charges for that would be around ₹ 300/year.

These are on the broker side charges, but you also have to calculate the government taxes like STCG (Short Term Capital Gain) and LTCG (Long Term Capital Gain) which are supposed to be paid to the government while filing your income tax return.

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