Investing in Shares

 Investing in Shares - In this blog, we will discuss the charges involved during trading & investment

                                        Investing in shares

A person cannot go directly to the stock market to buy or sell shares. Buying and selling of stocks have to be done through brokers. There are various costs involved in such transactions. It is important to understand the same to arrive at the real cost of buying or selling.

Brokerage

This is the charge levied by the stockbroker for transactions carried out by the investor based on the value of the contract or the flat rate.

 

Securities transaction tax

Securities Transaction Tax is a direct tax charged on the purchase and sale of securities that are listed on the recognized stock exchanges in India. STT rate is 0.1% of the transaction value for delivery-based equity share trades.

 

Stamp duty or GST

Stamp duty is charged by the state government as the transaction involves the transfer of securities from one party to another.  GST (Central & State GST) is levied as a percentage of brokerage charged for the transaction. Currently rate is 9% CGST and 9% SGST.

 

Transaction charges

Transaction charges are levied by the stock exchange for buying & selling of shares. SEBI charges a turnover fee of 0.00002% of the transaction amount.

 

Depository participant

DP charges are levied on all sell transactions of your demat account. These charges are levied by the depositories (NSDL/CDSL) for safekeeping the securities of the investor.

 

Capital gains

1.   Depending upon the holding period, tax is applicable on the profit earned from the sale of shares.

 

2.   Profit on the shares held for less than 1 year is subject to STCG

 

3.   Profit on the shares held for 1 year or more is subject to LTCG (above 1 lakh)

In this blog "Investing in Shares", we have discussed the charges involved during trading & investment.