The most basic cost of trading is the brokerage, which is paid to the broker for the services rendered. But if you open your contract note, you will find a plethora of charges apart from a brokerage that is debited to your trading account. There is the Securities Transaction Tax (STT) and the Goods & Services Tax (GST) that the broker collects from you on behalf of the government. Then there is state-level stamp duty which differs from state to state, which is a state impost that is collected by the broker. Then there is an exchange transaction fee payable to the stock exchange and there is SEBI turnover fee that is payable to the regulator. Let us understand the rates and how these costs stack up…

600 shares of RIL purchased at Rs.970/share – (Trade Value – Rs.5,82,000)

Cost Item

Rate of Impost

Actual Cost

Brokerage Cost

0.2% of Trade Value (Assumed)

Rs.1164.00

STT

0.1% of Trade Value (Delivery)

Rs.582.00

NSE Transaction Charges

0.00325% of Trade Value (NSE)

Rs.18.92

GST

18% of(Brokerage + Trans cost)

Rs.212.92

SEBI Turnover Fee

Rs.15/crore of volume

Rs.0.87

Stamp Duty

0.01% for Maharashtra

Rs.58.20

Total Cost

Rs.2036.91

Effective Cost of Trading

0.35%

As can be seen from the above illustration, there are 5 other heads of cost in your equity trading contract note apart from the brokerage costs. When you add up all these costs your actual effective cost goes up by 3/4th. That is why it is essential to get a holistic view of the costs of trading!