Thread by @FincademyIn

What are the various Charges and Taxes involved while buying and selling equity shares ?

A thread 🧵👇

1/ Brokerage Charges - Brokerage charge is the commission one has to pay to their brokers for transacting on your behalf and for using their platform. Discount brokers (like Zerodha, Upstox) offer free delivery trades and Flat Fee services where they charge a maximum of ₹20.

2/ Full Service brokers charge usually more commission than discount brokers. Some full-service brokers also offer flat fee services. The maximum brokerage that can be charged is 2.5% of the trade value. But disruption has ensured that this charge remains well below 0.5%.

3/ Security Transaction Tax (STT) - This tax is payable only on transactions carried by an exchange. Off-market transactions are not charged with STT. Only 0.1% STT is levied on the total transaction value for both buy and sell transactions.

4/ Brokerage and charges for intraday trading are usually less. For intraday, 0.025% STT is levied only on the sell-side. While discount brokers offer zero brokerage for delivery trades, full-service brokers usually charge more for delivery trades and less for intraday trades.

5/ Stamp Duty - This charge is levied only on the buy transaction. Different segments and instruments are charged differently. Like delivery equity trades are charged 0.015% while equity futures are charged 0.002%. Mutual Funds buy transactions are charged 0.005%.

6/ Previously stamp duty was charged by state governments, hence charges differed from state to state, on both buy and sell transactions. But since July 1st, 2020, a uniform charge is levied across the country only on the buy-side.

7/ Exchange Transaction Charges - Exchanges charge a fee for providing this service on both buy and sell transactions. NSE charges 0.00325% on equity trading, 0.0019% of total turnover for Futures trading, and 0.005% for options trading.

8/ BSE charges 0.003% for equity trading and charges nothing for Derivatives trading.

9/ SEBI Turnover Charges - SEBI is the Indian securities market regulator. This charge is levied on both buy and sell transactions and is equal to ₹10 per crore of transaction.

10/ Goods and Services Tax - GST is charged on the brokerage and transaction charges at the rate of 18%.

11/ Depository Charges - Depositories (CDSL & NSDL) charge the brokerage house and not the trader himself. Brokers then in turn charge the trader/investor for the Depository services.

12/ Annual Maintenance Charges are also levied on the investor which varies from broker to broker.

13/ Capital Gains Tax - Capital Gains Tax is the tax you have to pay on generating a profit from trading securities. Short-term Cap Gains Tax has to be paid when you sell a stock within one-year of buying. 15% tax is levied on short-term capital gains.

14/ Long-term Capital Gains Tax is levied when you sell a stock after holding it for a period of more than one year. 10% tax is charged on capital gains above ₹1 Lakh.

15/ Unpopular Fact - If LTCG is less than ₹1 Lakh, it is considered as an exemption which means no tax has to be paid. Also, it’s advisable that the investor should report such income to the tax department will know that ₹1 lakh exemption has been claimed on equity investments.

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BY :- @sneh_kagrana

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