Intraday trading may be quite fetching if the trader is experienced and knows when and how to trade, and has a mindset that is suited to grasp the ups and downs of intraday trading. However, one of the important aspects of intraday trading is intraday brokerage.
Published on 17 March 2023
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This is because, unlike long-term investors, intraday traders execute trades each day, and each of these transactions will be charged. This means that the trader could be paying almost twice more than what any long-term investor may have to pay.
Therefore, it is essential that a trader should know about intraday brokerage charges as every trade executed by the trader will be charged and could impact the gain or profit significantly.
What are the Different Intraday Brokerage Charges?
When you start intraday trading, as a trader, these are the following charges or fees that you will be required to pay as the cost of intraday trading:
Securities Transaction Tax (STT)
As per the Security Contracts (Regulation) Act, 1956, the STT or Securities Transaction Tax is charged on the whole value of a transaction when equities are traded. This fee is charged in the contract note or legal record document that the broker issues. Investors and traders pay this regulatory fee to the Central Government, and as of now, the tax rate is 0.025% of the transaction value, which applies to the intraday equity sale.
SEBI Regulatory Fee
Since the Securities and Exchange Board of India (SEBI) is a market regulator in India, the responsibility of protecting the interests of investors and traders lies with this authority. Starting January 01, 2007, the SEBI Regulatory Fee was introduced for all registered Indian stock exchanges. These rates are the same for delivery and intraday transactions. With the help of this fee, the SEBI can effectively meet the expenses utilised while handling their responsibilities. Also Read: Difference between Intraday Trading & Delivery Trading
Transaction Charges
Transaction charges, also known as turnover charges, are levied by the exchange on which the trade is made. This could be the Bombay Stock Exchange, National Stock Exchange and so on.These charges are not the same for every exchange; the BSE levies a charge of ₹2.75 per lakh while the NSE will charge ₹3.25 per lakh for equity transactions. As such, these stock exchanges are privately owned, and the transaction charges are said to generate quite a bit of revenue.
Stamp Duty
According to the Stamp Duty Act of 1899, the stamp charges varied from state to state for any security traded on the exchange. However, starting July 01, 2020, the government introduced uniform stamp duty charges for debentures, shares,currency, options and other capital assets. This information can be made available to the trader or customer when they start trading with a broker.
Brokerage & GST on Brokerage
Intraday brokerage is charged by the stockbroker the trader chooses to open their account with. But since the services offered by all brokers are not the same, the charges also vary. Simply put, discount brokers provide simple access to a trading platform with few essential services, which keeps the brokerage charge low. On the other hand, full-service brokers tend to be expensive because of the resources they offer along with a trading platform.
Full-service brokers charge 0.03% to 0.05% of the transaction value as well as a minimum fee of nearly ₹30 per transaction.
Trade and Stamp Duty that is Applicable after 1st July, 2020
Type of trade
New stamp duty rate
Delivery equity trades
0.015% or ₹1500 per crore on buy-side
Intraday equity trades
0.003% or ₹300 per crore on buy-side
Futures (equity and commodity)
0.002% or ₹200 per crore on buy-side
Options (equity and commodity)
0.003% or ₹300 per crore on buy-side
Currency
0.0001% or ₹10 per crore on buy-side
Bonds
0.0001% or ₹10 per crore on buy-side
Mutual funds
0.005% or ₹500 per crore on buy-side
Conclusion
When you select a stockbroker to start trading with, it is a wise call to find out about all the charges and fees that will be levied on the services and trades so that you do not have to bear the brunt of hidden charges later on! Also Read: Futures & options Trading Income Tax
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The stock market is volatile, especially if you are involved in intraday trading. However, it is the volatility of the stock market that makes it so lucrative for investors. Sudden peaks can result in significant profits, provided you follow intelligent and effective intraday trading strategies.
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In June 2021, when suddenly Adani Group’s stocks started hitting the lower circuit in the NSE (National Stock Exchange) for two consecutive days, many people started looking up the definition of the upper and lower circuit in the share markets. So, to ease the buzz a little, we are here to explain to you the concepts of the upper circuit and lower circuit.
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While trading in the stock markets, there is a cash margin that every investor needs to pay. This margin is paid to the individual stockbroker or the brokerage firm for covering the risks involved in the trade. But what happens when the investor opts for paying a lower margin? In that case, they can opt for a cover order or a bracket order.
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