By the word “trading”, a glorious mind gives a kick to your adrenaline, ‘Wow! With a slight twist of the game, you are going to earn a lot of money. But let’s be honest here. Every profit you earn will get deducted by some amount as taxation and maintenance fees. This works just the way your salary package in CTC works(somehow).
It is important to have this cutting the system for the chain to work smoothly. So, one does not need to worry about paying taxes and charges here because it is somehow profitable in long run.
Now let us divide on what basis is the charges applied on the basis of trading kinds.
Intraday trades also known as day trading, involve buying and selling stocks on the same day within a 24hours timeframe. This kind of trade is profitable in only multiple trades and earns small profits.
Delivery-based trades are the one that investor buys the stock and make payment of during the time of delivery itself. NRIs are allowed to do only such kinds of tradings.
Different Changes & Taxes In The Stock Market
These are the fixed percentage kind that depends upon the transaction size. On the basis of different trading types, for the intraday trades, the charges can go up to 0.02% to 0.08% of the fees. While for the delivery-based, the brokerage charges for the share market can go up to 0.1% to 0.6% of the transaction.
Securities Transaction Tax(STT)
These are the securities one has to pay while buying or selling commodities like stocks, derivatives, and equity in mutual funds. The Securities Transaction Tax Act regulates Security Transaction Tax (STT). The Act has listed down the securities on which the STT will be leviable. The Act has also mentioned the person responsible for collecting and paying the tax.
Goods and Services Tax(GST)
The GST is charged on the execution of paying your brokers as a brokerage fee. In the stock market, the GST for the brokerage is 18%.
There are charges that vary from different states. The amount is deducted after that total turnover is decided.
Another type of charge is levied as transaction charges which work by stock exchanges on both sides of trading. It is the same for intraday and delivery trading. The transaction fee of NSE and BSE of the total turnover amount stands at 0.00325% and 0.00275%.
SEBI turnover charges
SEBI turnover charges are equal to 0.0002% of the total turnover. These charges are cut on both sides of the transaction. As per GST Law 2017, according to the Securities and Exchange Act of 1992, there is no GST payable on Services provided by the Securities and Exchange Board of India (SEBI). This is to protect the interests of investors in securities and to promote the development of, and regulate the securities market.
Depository participant (DP) charges
The stock depositors are not the one that charges the DP charges but the participants are the ones involved here. This is one of the maintenance fees which you give to keep electronic format smoothly working.
Capital Gain Tax
Short-term capital gain tax – 15 percent fixed STCGT is levied, when you sell a stock with profits before 12 months of purchase, doesn’t matter what tax slab they are in. While an intraday profit is taxed on the basis of the Income-tax slab.
Long-term capital gain tax – 10 percent fixed LTCGT is levied, when you sell a stock with profits after 12 months of purchase, doesn’t matter what tax slab they are in.
Now that you know the amount and charges that are deducted when one plans to sell or buy stocks and equity be wise and take the step. Trading is lucrative yet needs a lot of understanding and mind games. Use the different stock calculators to get the profit amount you wish. Good luck and happy trading!!