What Are The Charges For Online Trading

There are a number of charges you pay on each stock trade you make. Although these charges are nominal, they do add up to substantial amounts when you trade in large numbers. On top of the charges you also have to pay capital gains tax on profits you make while trading stocks

There is usually an account opening fee you will have to pay for the trading account. This ranges from Rs. 300 to Rs. 1000. ICICI Direct charges a fee of Rs. 750 while India Infoline charges 425. This entitles you to use the standard online website to begin trading. However for specialized software, you may have to pay an additional fee. These applications are installed on your desktop unlike a website. This makes the response faster and do not need frequent page refreshes like a browser. For beginners the website will more than suffice.

There are also charges for every buy and sell order you execute. This is called brokerage and ranges from 0.1% to 0.75% of your order value. ICICI Direct charges 0.75% per transaction, India Infoline and Sharekhan charge 0.5% and Motilal Oswal charges .4%. You will also have to pay an additional Service Tax of 10.2% on the brokerage amount and a Securities Transaction Tax (STT) of .1% on the total trade value.

Lets take an example. Suppose you buy 1000 number of a stock costing Rs. 50 per stock.
Total Value of the transaction - Rs. 50,000
Brokerage (0.5%) - Rs. 250
Service Tax (10.2%) - Rs. 25.5 - This is on the brokerage.
STT (0.1%) - Rs. 50 - This is on the total trade value

Total payment - 50325.50, which takes your actual price per stock Rs. 50.32.

Please note that this is not an exhaustive list. Each broker may have additional rules like minimum brokerage amount. Also the above example was for a delivery trade. The charges vary for intra-day trading.