What trading and investing really cost in India

Four kinds of cost

The sections below go through each group in turn. Most of the examples use the same trade, 1,000 shares at ₹1,000 each, a trade value of ₹10 lakh, so the numbers can be compared directly.

Every charge on a share trade, and who sets it

"Delivery" means the shares are moved into your demat account and held, even if only overnight. "Intraday" means you buy and sell on the same day, so the shares never reach your account.

STT is the largest charge set by law, and for delivery it applies to both sides, so 0.2% of the trade value goes in STT on every round trip. GST is charged on brokerage too, so a brokerage rate of 0.5% really costs 0.59%. Futures and options carry their own STT rates (0.05% of the value on selling futures, 0.15% of the premium on selling options), which this page does not cover in detail.

The DP charge is per company and per day, not per share. Selling 1,000 shares of one company in one go costs one DP charge. Selling 10 shares of each of 20 companies on one day costs twenty.

One trade, line by line

The same trade at three kinds of broker

Costs that never show on the bill

At any moment a share has two prices: the highest price a buyer is offering (the bid) and the lowest price a seller will accept (the ask). Buying at the market means paying the ask; selling at the market means getting the bid. The gap between them is the spread.

Other costs that sit outside the per-trade charges:

• Demat annual maintenance charge. From nothing to several hundred rupees a year, depending on the broker and the account type. It is charged whether or not you trade.
• Call-and-trade fees. Many brokers charge extra for orders placed over the phone.
• Pledge and margin charges. Pledging shares as collateral, or buying with borrowed money, carries its own fees and interest.
• Payment and transfer fees. Some brokers charge for adding money through certain payment methods.

How often you trade matters more than any single rate

SEBI has studied what happens to individual traders. Its 2024 study of the futures and options segment found that 93% of individual traders made a net loss over FY22 to FY24, and its 2024 study of intraday trading in the cash segment found that about 7 in 10 individual intraday traders made a loss in FY23. The F&O study also found that, for traders who lost money, transaction costs made up a large part of the loss. These are past figures about large groups of people. They do not say what any one person will experience.

Costs of mutual funds and ETFs

The expense ratio is taken out of the fund's value every day, so it never appears as a separate bill. The returns a fund publishes are already after it. Every scheme comes in a direct plan, bought from the fund house, and a regular plan, bought through a distributor. Both hold the same portfolio; the regular plan's expense ratio is higher because it also pays the distributor for their service. Each fund publishes both figures on its factsheet. The exit load period and rate are in the scheme document.

Tax on gains and dividends

Surcharge (where income is high; capped at 15% on these capital gains) and 4% health and education cess are added on top. The ₹1.25 lakh exemption is one allowance per person per year, shared across all long-term gains on listed shares and equity mutual funds, not per stock. Debt funds bought after March 2023 follow different rules: their gains are added to your income and taxed at your slab rate, however long they are held.

What you can deduct, and what happens to losses

• Brokerage and the other costs of buying and selling can be deducted from the gain. STT cannot.
• A short-term loss can be set off against short-term or long-term gains. A long-term loss can be set off only against long-term gains.
• Unused capital losses can be carried forward for 8 years, but only if your tax return is filed by the due date.
• Intraday (speculative) losses can be set off only against speculative income and carried forward for 4 years.

Tax rules change with budgets and the details depend on your full income. For your own situation, check with a chartered accountant or the income-tax department's guidance.

One-time costs vs every-year costs

Work out your own trade

What changes your costs

1. Your broker's pricing. For delivery trades, it is the largest difference between one bill and another. Check the brokerage, the DP charge and the annual demat fee.
2. How often you trade. Every delivery round trip carries 0.2% in STT. Frequent trading multiplies every charge.
3. The spread. In thinly traded shares and ETFs, the gap between the buy and sell price can cost more than all the charges. The bid and ask are shown in the market depth before an order is placed.
4. Small sells across many companies. The DP charge applies per company per day, so many small sells cost more than one larger sell.
5. Recurring fees. For a fund, the expense ratio and any exit load; for a demat account, the annual charge.
6. How long you hold. Crossing 12 months changes the tax rate on a gain from 20% to 12.5%, with an exemption.
7. The contract note. Every broker must send one after each trading day. It lists every charge, and is the figure to check.

This page explains costs. It does not suggest a broker, a fund, a holding period or whether to trade. See also dividends and how they are paid, and the dividend income calculator.