Brokerage

Brokerage is the fee a stockbroker charges for executing your buy and sell orders on the exchange. Your broker sets it and keeps it, which makes it different from the statutory charges on your contract note that go to the exchange, the regulator or the government. You pay brokerage on every executed order, whether the trade makes money or not, and GST at 18% is added on top.

Types of brokerage plans

Two details matter when reading a plan:

• “Per executed order” means per order, not per trade. Buying and later selling is two orders, so a round trip pays brokerage twice. Each leg of a multi-leg strategy is a separate order.
• The same plan can price segments differently. A broker can charge nothing on delivery trades but a fee on every F&O and intraday order.

How brokerage is calculated: worked examples

The examples below compare a flat-fee plan of ₹20 per order with a plan charging 0.05% of turnover on futures and ₹50 per lot per side on options. Both plans, and the index at 20,000 with a lot size of 50, are hypothetical.

On a flat-fee plan, brokerage stays the same however big the order. On a percentage or per-lot plan, it grows with the size of the trade. That’s why active F&O traders usually prefer flat-fee pricing, while occasional investors may care more about research and advice than the fee.

Adding GST

GST at 18% is charged on brokerage. On the flat-fee options round trip above:

• Brokerage: ₹40
• GST: 18% × ₹40 = ₹7.20
• Total: ₹47.20, before STT, exchange charges and stamp duty

How brokerage affects your breakeven

Brokerage has to be earned back before a trade makes money. With a flat ₹40 round trip on one lot of 50 units, the premium has to rise by ₹40 ÷ 50 = ₹0.80 per unit just to cover brokerage.

Put five lots in a single order and the same ₹40 is spread over 250 units, which is only ₹0.16 per unit. On a flat-fee plan, trading more lots per order makes brokerage a smaller share of each trade. On a per-lot plan, it doesn’t.

How brokerage adds up for active traders

• Multi-leg strategies. A four-leg iron condor means eight orders to open and close, so it pays brokerage eight times.
• Frequent trading. A scalper placing 20 orders a day for 20 trading days on a ₹20-per-order plan pays ₹8,000 a month in brokerage, plus ₹1,440 in GST: ₹9,440 before any other charge.
• Losing trades cost the same. Brokerage is charged on every order regardless of outcome, so a strategy with many small losing trades pays a lot of brokerage for nothing.

Brokerage vs the other charges on your contract note

Brokerage is the only line on the contract note you can reduce by choosing a different broker or plan. Everything else is the same whoever you trade with.

Other broker fees to check

Brokerage isn’t the only thing a broker can charge. Before choosing one, check its full charge list for things like:

• Charges for placing orders by phone (call and trade)
• Charges when the broker squares off an intraday position you didn’t close yourself
• Depository charges when you sell shares held in your demat account
• Account opening and annual maintenance charges
• Interest or fees on margin funding and late payments

Ways to keep brokerage under control

• Pick a plan that fits how you trade. Frequent F&O traders usually pay far less on a flat-fee plan. Someone who trades a few times a month may value other services more.
• Place multiple lots in one order on a flat-fee plan, instead of several separate orders.
• Close intraday positions yourself before the broker’s auto square-off time, to avoid square-off charges.
• Track brokerage as a cost. Keep it in your trade records so you see your real result, the gap between gross P&L vs net P&L, not just the price move.

To see what a setup nets after brokerage, STT and exchange charges before you take it, run the numbers through Stolo’s scalping calculator.