Zerodha Brokerage & Other trading costs like Govt taxes (STT, GST etc)
When we execute trades in Indian stock market, we pay fees to two entities for execution of trades.
- Stock Broker – Also knows as Brokerage fees.
- Government Taxes – Fixed taxes in form STT(Security Transaction Tax), GST, SEBI Charges and others. The stockbroker is responsible to collect these taxes from end customers(you and me) and pay them to the government.
The applicable government taxes vary based on the financial instrument (for example – we have different tax rates for trading in Stocks vs Futures vs Options). However, the tax itself is same across all stock brokers. So, if you buy a lot of Infosys Futures – the taxes charged is same whether you trade via Zerodha or ICICI Direct.
The only exception is GST where brokerage charged by stockbroker is included in the calculation. Hence if your broker charges high brokerage – the GST tax component would be higher.
Government taxes charged for stock trading is same for all brokers – except GST
Since taxes are same – most traders pay close attention to brokerage charged by stock brokers and opt for brokers charging lowest brokerage. This makes complete sense because high brokerage reduces the profit or increases loss from the trade.
As indicated in our detailed Zerodha review, Zerodha is the pioneer of discount stock brokers in India. Starting from 2010 – Zerodha has been charging lesser of Rs 20.00 or 0.01% of trade turnover as brokerage. Also from 2016, Zerodha waived brokerage on delivery based trades (meaning you pay “No Brokerage” – if you buy a stock today and sell tomorrow or after tomorrow).
Zerodha Equity Delivery Brokerage + Taxes
As discussed, if you open a trading account with Zerodha – You pay “No Brokerage” for buying and selling stocks(also knows as equity or share). Hence, if you buy 50 Shares of Reliance on 16/08/2017 and sell them on(or after) 17/08/2017, you do not pay any brokerage charges to Zerodha.
It is worth noting that although Zerodha does not charge brokerage, we still do not have to pay goverment charges like GST, STT, SEBI charges etc on delivery based trades.
Let us take an example to get a complete understanding of brokerage and taxes charged in case of delivery based trades.
Nature of transaction = Buy Name of Stock = ITC Number of Stocks = 100 Stock Price = 270 Total Turnover = 100 * 270 = Rs 27,000 (Twenty Seven Thousand) Zerodha Brokerage = Rs 0 STT(Security Transaction Tax ) = 0.1% of Total Turnover = 27,000 * (.1/100) = 27 Exchange transaction charge = 0.00325% of Turnover = 27,000 * (0.00325/100) = 0.88 GST = 18% of (Brokerage + Exchange Transaction Charge) = (0+0.88) * (18/100) = 0.16 SEBI Charges = 0.00015% of Turnover = 27,000 * (0.00015/100) = 0.04 Hence, total taxes and charges are Rs 28.08** ** - State wise stamp duty charged extra. **** - Similar charges would be charged when you sell your stocks.
As you can see Zerodha charged Rs 0.00 brokerage on this transaction. The reason for offering “No Brokerage” for delivery based trades is simple, Zerodha hopes that this would result in more customers opening their accounts with Zerodha and some customers would start trading in F&O, Intraday and hence generate ultimately brokerage.
Zerodha Equity Intraday Brokerage + Taxes
Let us start with understanding the definition of Intraday. Intraday trading implies that you buy and sell the stock on the same day. In the case of intraday trading, stocks do not even reach our demat account(bought & sold on the same day) and hence comparatively lesser government taxes are involved.
For Intraday trades, Zerodha’s brokerage is lower of 0.01% of turnover or Rs 20.00. Hence, if the turnover is less than Rs 200000 (two lakh) the brokerage charged is 0.01% of turnover else brokerage is Rs 20.00.
Let us take an example to get a complete understanding of brokerage and taxes charged in case of intraday trading.
Name of Stock = Reliance Industries Number of shares = 100 Bought at = 1615.00 Buy Turnover = (1615 * 100) = Rs 161500 Sold at = 1620 Sell Turnover = (1620 * 100 ) = Rs 162000 Turnover = Buy Turnover + Sell Turnover = 323500 Zerodha Brokerage = (161500 + 162000) * 0.01/100 = 323500 * (0.01/100) = Rs 32.35 STT(Security Transaction Tax) = 0.025% of Sell Turnover = 162000 * (.025/100) = 41 Exchange transaction charge (ETC) = 0.00325% of Turnover = 323500 * (0.00325/100) = 10.51 GST(Goods & Service Tax) = (Brokerage + ETC) * 18% = (32.35 + 10.51)*18/100 = 7.71 SEBI Charges = 0.00015% of Turnover = 323500 * (0.00015/100) = 0.49 Hence, total taxes and charges are Rs 92.06** ** - State wise stamp duty charged extra.
Zerodha Futures Brokerage + Taxes
Future trading is done in lots and hence brokerage & taxes are applicable accordingly.
For Futures trades, Zerodha’s brokerage is lower of 0.01% of turnover or Rs 20.00. Hence, if the turnover is less than Rs 200000 (two lakh) the brokerage charged is 0.01% of turnover else brokerage is Rs 20.00
To make things simpler, let us take an example of a trade on Nifty 2017 August Future.
Name of Security = Nifty 2017 August Future Lot Size = 75 Buying Price = 9909 Buy Turnover = 9909 * 75 = 743175 Selling Price = 9950 Sell Turnover = 9950 * 75 = 746250 Turnover = Buy Turnover + Sell Turnover = 1489425 Zerodha Brokerage = Rs 40.00 STT(Security Transaction Tax) = 0.01% of Sell Turnover = 746250 * (.01/100) = Rs 75 Exchange transaction charge (ETC) = 0.0021% of Turnover = 1489425 * (.0021/100) = Rs 31.28 GST(Goods & Service Tax) = (Brokerage + ETC) * 18% = (40 + 31.28)*18/100 = 12.83 SEBI Charges = 0.00015% of Turnover = 1489425 * (0.00015/100) = 2.23 Hence, total taxes and charges are Rs 161.34** ** - State wise stamp duty charged extra.
Zerodha Options Brokerage + Taxes
Options trading is also done in lots and hence brokerage & taxes are applicable accordingly.
For options trades, Zerodha’s brokerage charges a fixed brokerage of Rs 20 per trade.
Let us take an example and see how various taxes & brokerage is calculated.
Name of Security = Nifty August 9900 Call Option Lot Size = 75 Buying Price = 99.85 Buy Turnover = 99.85 * 75 = 7488.75 Selling Price = 105.2 Sell Turnover = 105.2 * 75 = 7890 Turnover = Buy Turnover + Sell Turnover = 15378.75 Zerodha Brokerage = Rs 40.00 STT(Security Transaction Tax) = 0.05% of Sell Turnover = 7890 * (.05/100) = Rs 4 Exchange transaction charge (ETC) = 0.053% of Turnover = Rs 8.15 GST(Goods & Service Tax) = (Brokerage + ETC) * 18% = (40 + 8.15)*18/100 = 8.67 SEBI Charges = 0.00015% of Turnover = 15378.75 * (0.00015/100) = 0.02 Hence, total taxes and charges are Rs 60.84** ** - State wise stamp duty charged extra.
Zerodha has been know to innovate to make the life of customers easy and hence they have also developed Zerodha Brokerage Calculator and Chrome Plugin of Zerodha Brokerage Calculation which can be used to find the brokerage extremely easily.
If you still haven’t opened your trading account with Zerodha, please click on button below and someone from Zerodha will call you shortly.