Online Share Trading Costs in India


Some of you intend to invest online in shares and mutual funds. This post is not about How to trade in NSE. But about process and costs involved in online trading.

If you wish to invest in shares you need the following three accounts apart from money.

  1. Broking A/c with brokers registered with BSE(Bombay Stock Exchange) and NSE (National Stock Exchange)
  2. Demat A/c with Depository Participants ( Now a days most of the brokers themselves offer Demat services )
  3. Bank A/c preferably with net banking facility to transfer and receive money.

Each one of the above three would involve some direct and indirect costs. Before contemplating to invest online, Please make sure to learn about these things.

Some of the reputed online broking houses are www.5paisa.com, www.religareonline.com, www.sharekhan.com and www.motilaloswal.com. Before starting relationship with any of the broking firm, please do contact their existing customers and get feedback. This one step itself avoids you of later disappointment.
Charges involved in opening an online trading A/c. Enquire about direct and in direct costs, research support and customer care. They should allow you place orders through internet and phone ie. Both online and offline. Some of the direct charges are

  1. One time charges

This may be around Rs.500 – Rs 750. They term this as A/c opening charges or registration charges or documentation charges. This is negotiable for most of the brokers.

  1. Recurring charges

It includes annual maintenance charges of DP A/c, brokerage commission, Security turnover tax, service tax, regulatory charges and demat transaction charges.
For broking A/c, none of the brokers charge annual maintenance charge. Brokerage commission varies with broker and type of transaction. For intra day trade, the range is 0.05% to 0.25% of total value of trade. For delivery trade, the range is 0.25% to 1.00%. Most of the brokers give concession ( or charge lower brokerage ) based on your volume of trade and deposit money. The Security turnover tax, service tax and regulatory charges are same for all brokers as it is imposed by the Union Govt.

SECURITIES TRANSACTION TAX (STT) EQUITY ( Cash) - STT is calculated on the Weighted Average Price of the client for a particular day. STT at the rate of 0.125% of turnover will be charged in addition to the Brokerage on all Delivery Trades STT at the rate of 0.025% of turnover will be charged in addition to the Brokerage on sell leg of all non-delivery Trades.
For F& O SECURITIES TRANSACTION TAX (STT) of 0.017 % on Turnover will be charged additional to the Brokerage in case of SELL TRADES ONLY.
For Latest please visit
http://www.moneycontrol.com/india/news/budget-markets-news/detailsstt-ratesjune06/10/03/204293


SERVICE TAX OF 12.24 % of BROKERAGE will be charged additional.

For Stamp duty Details
http://www.5paisa.com/download/Rates_applicable_ofr_Stamp_Duty_statewise.xls
For regulatory charges Details
http://www.5paisa.com/download/Regulatory_Charges.doc

  1. Deposit

You need keep a minimum amount of Rs.5000 with your broker as deposit. Your exposure limit will be based on this deposit.

Charges involved with opening a Demat A/c

  1. One time Charges

This is A/c opening charges typically involve Rs.500 to Rs.1000. If you register for demat A/c with your broker himself, most of the brokers waive this charge completely. It is advisable to open demat A/c with your broker as it is not only economical, also convenient.

  1. Recurring charges

It includes annual maintenance charges ( Rs.250 to Rs.750), transaction costs and monthly holding charges. For every buy and sell transaction, you will be charged 0.01% of the value of your transaction with minimum of Rs. 20 to Rs.50 ( This is over and above brokerage). Some demat participants charge only sell transactions and offer you free buy transactions (Eg. Indiainfoline or 5paisa). Previously you are charged Re.1 /month/company held in your demat A/c. Now a days this holding charges were withdrawn. But check all charges before opening an A/c.

Bank A/c
To transfer and receive funds, you need net enabled bank A/c. Each broker has tie-up with different banks. Please make sure that your broker has tie-up with your existing bank else you need to open an new A/c.

1 comments:

Multibagger stocks said...

Wow, this is pretty interesting. Inspiring, as well. Thanks for sharing such inspiring experience with us. Great blog, congrats.!

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