There are a number of charges that are levied when you buy and sell shares in India whether in the cash market or the futures segment of the share markets. Take a look at the various charges involved when you buy and sell shares in India:
1) Brokerage charges
The very first charge that is levied are brokerage charges. There are no standard charges and the brokerage varies from individuals to individuals. Again the brokerage depends whether the deal is done in the cash segment or the futures segment of the capital market or whether it is delivery based or intra day broking.
In the intra day brokerages vary from 0.01 per cent ad above. For cash based delivery the brokerage is high.
2) Service Tax on Brokerage
On the total amount of brokerage there is a flat service tax of 10 per cent that is levied. So, if your brokerage is Rs 100, there would be a service tax of Rs 10, that is payable.
This is another charge that is payable on the service tax, to determine the exact amount of cost that is payable. The charges are 2 per cent of the service tax.
4) Securities Transaction Tax
In the cash market the charges are 0.125% of the volume. Once you pay the Securities Transaction Tax, there is no need to pay capital gains on profit from sale of shares, if you have sold the shares above one year.
5) Stamp Duty
Earlier one had to fix physical stamps on the share certificates which were payable at the time of transfer of shares. Now, since shares are traded in electronic form, all you need to do is pay stamp duty. In the cash segment of the capital markets the stamp duty that needs to be paid is 0.01 per cent of volume.
The charges that one pays for buying and selling shares is perhaps more than that one pays for even sale of property. One needs to clearly understand the various charges involved, though most of these are standard charges.