For most people, brokerage charges are the only dealmakers or breakers when choosing a trading app. However, little do a lot of traders realize that the true cost of their investment activities extends beyond brokerage fees. Authorities levy additional fees that stock trading apps cannot waive. Here’s some more light into this topic:
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What fees are levied by authorities?
From SEBI:
- SEBI Charges: SEBI regulates the Indian stock market and charges fees to fund its regulatory activities. These fees are typically a small percentage of the transaction value.
From the exchange houses:
- Transaction charges: Depending on which exchange an investor uses to trade securities, the exchange house—NSE and BSE—charges a fee. The fees charged by NSE aren’t necessarily the same as those charged by the BSE.
From the Government:
- Stamp Duty: A type of tax levied on the trade of all securities.
- GST: A type of tax levied on brokerage charges.
- STT/CTT: These types of taxes are levied when equity, F&O, and commodities are traded.
From CSDL and NSDL
- DP Charges: Depository participants are responsible for facilitating the settlement of trades through Demat accounts. To maintain their function, they collect some fees from Demat account holders.
What’s more to know:
1. These fees vary across different investment instruments, as well as by the entity charging them.
2. These fees are usually fixed across all trading platforms.
3. They could be revised from time to time. Thus, traders must thoroughly check their broker’s website to understand the complete pricing. Usually, all brokers present an up-to-date table comprising all types of fees and the month of the recent revisions.
For instance, the NSE transaction fees for equity intraday and delivery were changed from 0.00325% to 0.00322% per trade starting from 1st April 2024.
Why is it important to know about these fees?
Knowledge of these fees allows investors to make more fruitful decisions about their trading strategies and frequency. If traders know of these fixed charges, they can better adjust their trading budget and choose their trading platforms accordingly. For instance, investors with a limited budget may favor zero brokerage trading platforms when they know that these fixed charges can’t be waived. By saving on avoidable brokerage fees, investors can place orders while staying within the budget.
Final Words
Behind every trade in the stock market, there are many participants involved other than the traders and their stock trading platforms. The Government of India, depository participants like the CSDL, regulators like SEBI, and exchanges like the NSE and BSE can also impose fees or taxes on stock market trades. STT/CTT, exchange fees, and GST are some examples of the charges levied by these authorities.
These charges are typically fixed across all trading platforms. However, they are susceptible to revisions from authorities, which can change the rates from time to time. To get a clear understanding of the current rates, it’s best for investors to check out the official pricing scheme page on the investment app they’re using.