What is Brokerage?
Brokerage is the commission charged by a stockbroker when you buy or sell a security. The fee structure depends on the broker and the type of order (intraday, delivery, options, etc.). Discount brokers often charge a flat fee or offer zero brokerage on delivery trades.
Formula Used
Brokerage = Min(Broker Rate x Trade Value, Maximum Cap) Trade Value = Buy Price x Quantity + Sell Price x Quantity Total Charges = Brokerage + STT + Exchange Fees + SEBI Charges + Stamp Duty + GST
Other Charges
- STT (Securities Transaction Tax) - levied by the government on buy/sell trades.
- Exchange Transaction Charges - charged by NSE/BSE.
- SEBI Charges - a nominal fee collected by SEBI.
- Stamp Duty - applied by the state for transactions.
- GST - applicable on brokerage and exchange transaction charges.
Frequently Asked Questions (FAQs)
What is brokerage in stock trading?
It is a fee charged by brokers for executing your trades on the exchange.
Are brokerage charges the same for all trades?
No, delivery and intraday trades typically have different fee structures.
What are the hidden charges in trading?
Other than brokerage, charges like STT, exchange fee, and taxes apply.
How can I save on brokerage?
Use discount brokers and choose trading plans with capped brokerage.