Online share market trading offers complete control to traders—from order placement to execution and monitoring—without relying on a broker’s intervention. This streamlined process is transparent, efficient, and cost-effective, especially when brokerage charges are low.
Why Low Brokerage Matters
Low brokerage significantly reduces the break-even point for trades, enabling traders to churn capital more frequently and profitably. When transaction costs are minimal, traders can maximize returns on shorter-term movements, making trading more attractive and efficient.
Costs in Trading Go Beyond Just Brokerage
While brokerage is an important fee, there are several additional charges associated with stock market transactions:
1. Brokerage Fees
Intraday Trades: Typically 7–10 basis points (bps) on the trade value.
Delivery Trades: Around 30–50 bps.
Futures & Options: Lower rates due to high volume and leverage.
Brokerage is the fee charged by your broker for executing trades and facilitating the transaction process.
2. Securities Transaction Tax (STT)
Collected by the Government of India.
Intraday trades: STT charged only on the sell leg.
Delivery trades: STT charged on both buy and sell transactions.
3. Goods and Services Tax (GST)
Introduced in July 2018, replacing service tax.
Charged at 18% on the brokerage amount.
Collected by the broker and paid to the government.
4. Stamp Duty
Levied by individual state governments.
The rate varies by state.
Applied on the value of the transaction and is mandatory for all trades.
5. Regulatory Charges
Exchange Transaction Fees:
NSE uses an ad valorem model (based on value).
BSE uses a fixed-fee model.
SEBI Turnover Fee:
Charged by SEBI (the capital market regulator) on the total turnover.
Also collected through the broker’s contract note.
Why You Should Insist on Competitive Brokerage
To enhance your trading profitability, minimizing brokerage is crucial. Here are three strong reasons to prioritize low brokerage:
1. Total Costs Add Up Quickly
Beyond brokerage, traders incur STT, GST, stamp duty, SEBI fees, and exchange charges.
Indirect costs such as poor liquidity, wider bid-ask spreads, and lack of real-time information can also impact trade efficiency.
Keeping brokerage low helps offset these unavoidable expenses.
2. Improve Return on Investment (ROI)
Active traders rely on high-frequency trades to generate ROI.
Lower brokerage reduces the cost per transaction, thus raising net profit and helping traders hit break-even sooner.
3. Offset Other Hidden Costs
Other charges such as:
Demat account maintenance (AMC)
Payment gateway charges
Corporate governance risks
A competitive brokerage structure can help compensate for these overheads, especially for retail investors operating on tighter margins.
Conclusion
In online stock trading, every fraction of a percent matters. While brokerage is just one of many costs, it is the one cost you can directly control. Choosing a broker that offers low and transparent fees not only enhances your trading experience but also significantly improves your overall profitability. For active traders in particular, keeping brokerage charges low is not just an advantage—it’s a necessity.
