You bought ₹1 lakh of Reliance Industries on Monday. You sold it Friday. The stock barely moved — you made ₹800. Then the contract note arrived and your net profit was ₹620. Where did ₹180 go? Nobody stole it. It just got distributed across six different line items that most traders never bother reading. Let's fix that.
The Contract Note Nobody Actually Reads
Every trade you execute generates a contract note — a legally mandated document your broker must send within 24 hours. Most traders glance at the net amount and close the PDF. That's a mistake, especially if you're trading frequently or working with thin margins.
A typical contract note for a ₹1 lakh delivery trade has these entries: brokerage, STT, exchange transaction charges, GST, SEBI turnover fee, and stamp duty. Some brokers also add a DP (Depository Participant) charge on delivery sells — usually ₹13 to ₹20 flat per scrip per day. That one surprises people the most because it's flat, not percentage-based.
On that ₹1 lakh round-trip (buy + sell), the total of all statutory charges — excluding brokerage — comes to roughly ₹125 to ₹140. That's about 0.13% of trade value, and it applies even if your broker charges zero brokerage.
STT: The Biggest Bite, and Why It Exists
Securities Transaction Tax is collected by your broker and handed to the central government. On equity delivery trades, it's 0.1% on the buy side and 0.1% on the sell side. On a ₹1 lakh delivery trade, that's ₹100 on buy plus ₹100 on sell — ₹200 total for the round-trip.
That makes STT by far the largest statutory cost on a delivery trade. India's STT rate is among the highest in any major market globally. When SEBI raised STT on F&O in the July 2024 Union Budget — options STT jumped from 0.0625% to 0.1% on sell side — it became front-page news for derivative traders.
For intraday equity trades, STT drops sharply: 0.025% only on the sell side. On a ₹1 lakh intraday round-trip, you're paying just ₹25 in STT versus ₹200 for delivery. This is why short-term traders often prefer intraday over delivery on pure cost grounds — though the capital gains tax treatment is a separate conversation.
Exchange Fees, SEBI Levy, and the Charges Under ₹10
NSE charges a transaction fee of roughly ₹3.25 per lakh of turnover on equity delivery trades (this changes periodically, check NSE's circular for current slabs). On a ₹1 lakh buy, that's about ₹3.25. Round-trip adds another ₹3.25. Call it ₹7 total.
SEBI's turnover fee is ₹10 per crore of turnover — which works out to ₹0.10 per lakh. Tiny. On your ₹1 lakh round-trip it's literally 20 paise. But SEBI collects this from every trade on NSE and BSE, across crores of daily transactions. In FY24, SEBI collected over ₹650 crore through this fee alone.
GST at 18% is applied only on brokerage and exchange transaction charges — not on STT, not on stamp duty. So if your brokerage is ₹0 (flat-fee discount broker), GST still applies on exchange fees. On ₹7 of exchange charges, GST adds roughly ₹1.26. When brokerage is ₹20 flat per order, GST adds ₹3.60 on that leg alone.
Stamp Duty: The State Government's Cut
Stamp duty is state-level, collected by your broker and remitted to the state where the trade originates (which in practice means the state where your broker is registered). Rates were standardised nationally in 2020 — before that it was a patchwork mess.
For equity delivery: 0.015% on the buy side only. On a ₹1 lakh delivery buy, that's ₹15. For intraday equity: 0.003% on buy side only, so ₹3 on a ₹1 lakh buy. Stamp duty is capped at ₹1,500 per instrument per trade — so a single ₹10 crore block deal doesn't pay proportionally more beyond that cap.
Note that stamp duty is charged only on buys, not sells. This is consistent with the legal logic — you're "stamping" the acquisition of a security, not the disposal.
How Zero-Brokerage Brokers Actually Make Money
Zerodha, Groww, Upstox, Angel One — they all advertise ₹0 on delivery trades. They're not lying. But they're also not charities.
Revenue for a discount broker running zero delivery brokerage comes from several places. First, intraday and F&O trades where flat fees of ₹20 per order apply — and active traders can generate hundreds of orders a month. Second, interest on idle cash in your trading account (the float). Third, margin interest when you use margin trading facilities at 18–24% annualised. Fourth, payment for order flow in some structures, and fifth, premium products like Kite Connect API subscriptions (Zerodha charges ₹2,000/month for API access).
The DP charge — ₹13 to ₹20 per scrip per day on delivery sell — is another source. Sell five different stocks in a day, and you've paid ₹65–₹100 in DP charges alone, regardless of trade size. Many traders don't realise this is separate from the exchange-side DP charges.
What an SIP Investor Pays vs an Active Trader
A person running a monthly ₹10,000 SIP into Nifty 50 index funds via a mutual fund platform pays essentially nothing in direct trading charges — no STT, no exchange fees, no stamp duty beyond the fund's internal costs. The expense ratio does the work, typically 0.1% to 0.2% per year for direct index funds.
Now take an active trader doing 20 delivery trades a month, average trade size ₹50,000. Round-trip charges per trade: roughly ₹65–₹70 in statutory charges alone (STT dominates at ₹100 on ₹1 lakh, so ₹50 on ₹50,000), plus DP charges on sells. That's ₹1,300–₹1,500 a month in pure friction costs before a single profitable or losing trade is counted.
Over 12 months, that's ₹15,600–₹18,000 walking out the door. If this trader's portfolio averages ₹5 lakh, that friction alone is 3–3.5% annually. Beating a Nifty index fund returning 12% while paying 3.5% in friction requires consistently excellent stock picking — which most retail traders don't demonstrate over multi-year periods.
Run Your Own Numbers Before You Trade
The practical takeaway is simple: before entering any trade, know your break-even move. On a ₹1 lakh delivery round-trip with zero brokerage, you need the stock to move at least 0.25–0.30% in your favour just to cover all charges including DP fees. On intraday with ₹40 round-trip brokerage, you need about 0.10–0.12% movement to break even.
Pull up your last 10 contract notes. Add up every line except the trade value itself. Divide by total turnover. That percentage is your personal friction rate — and it compounds against you every single month you trade actively.
Once you know that number, you'll trade more selectively. You'll hold winners longer before selling, because every round-trip costs real money. You'll stop churning the portfolio on minor news. The market doesn't owe you returns — but at least now you know exactly what you're paying to participate in it.