What Is a Broker and How Brokerage Charges Work?

3 min read | Updated on November 27, 2025, 16:52 IST

Stockbroker and Brokerage – The Essentials in Stock Market Investing

When you want to buy or sell any shares, you cannot simply walk into the stock exchange to execute this transaction. For this, you need an intermediary who does these transactions for you.

The intermediary who carries out the stocks and securities transaction is known as a ‘stockbroker’. Here, we will understand in detail the role of a stockbroker, the brokerage and the charges involved in the stock market transactions.

Who is a Stockbroker?

A stockbroker is a licensed individual or a firm authorised by the Securities and Exchange Board of India (SEBI) to facilitate buying and selling stocks and other securities on a stock exchange. They also provide a trading platform, like a website or a mobile app or both, for you to trade. So, essentially, stockbrokers are the bridge between you and exchanges.

Open FREE Demat Account within minutes!

Join now

The Evolution of Stockbrokers

In earlier times, stockbrokers operated through a physical office where clients would visit or call to place orders. The cumbersome paperwork involved, limited financial literacy and overall perception of stock trading being equal to gambling limited the number of retail investors.

Today, the improved financial literacy and the digital investment platforms provided by the stockbrokers have propelled lakhs of retail investors into the Indian stock market. Almost all stockbrokers have a digital platform where the entire process of buying and selling shares is paperless and does not require a visit to the broker's office. Even the account opening process is digital. The stockbrokers work under strict guidelines of SEBI and stock exchanges. This adds to investors' trust.

Types of Stockbrokers

In India, there are two types of stockbrokers, namely,

Full-service brokers

Provide investment advisory services and fees are higher

Discount brokers

Provide basic trading services, without advisory and charge less fees

Both these categories of brokers suit different investor categories.

Full service brokers

These brokers, apart from providing a platform for transactions, also offer a vast array of services like research reports, investment advice, portfolio management and personalised support. These brokers usually charge a certain percentage of trade value as brokerage. Eg- ICICI Securities, Nuvama Wealth Management

Discount brokers

Upstox is a discount broker. For discount brokers, their focus is mainly on the execution of trades through modern-day digital platforms. Discount brokers don’t get into advisory and portfolio management. They usually charge zero or minimal brokerage and flat fees for most of their services.

Understanding Brokerage Charges

Brokerage is what a broker charges for providing services. A stockbroker charges certain fees to facilitate the securities transaction. Let’s understand them for each type of broker,

Full-service broker

These brokers usually charge a certain percentage of the trade value as a brokerage fee. This rate differs from broker to broker and also the value of the trade. There is a certain rate for one range. Like for the value of trade between ₹10,000 to ₹1lakh, there might be a certain per cent brokerage. For ₹1 lakh to ₹10 lakh, the rate may differ and so on. The brokerage usually ranges from 0.25% - 0.75%

Discount broker

These brokers charge a flat fee per trade, say, irrespective of transaction value. Upstox charges a flat ₹20 as a brokerage on delivery trades (where you buy for long-term investing) and intraday trades. These brokers are highly beneficial for high-trade values.

Additional Charges Over Brokerage

Brokerage isn’t the only charge in stock market transactions. There are certain other fixed and variable costs associated. Let's learn about them,

Securities Transaction Tax (STT)

This is levied by the government on all stock market transactions. For equity delivery trades, it's 0.1% on both buy and sell sides.

Exchange Transaction Charges

These are fees collected by NSE and BSE for using their platforms, calculated at around 0.00297% of the transaction value.

IPFT (Investor Protection Fund Trust) charges

These are charges for NSE trades, the rate being ₹10 per crore of turnover and ₹50 per crore of premium value.

GST (Goods and Services Tax)

This applies at 18% to brokerage, transaction and IFPT charges.

SEBI Charges

It charges ₹10 per crore of turnover to fund the regulatory body's operations.

Stamp Duty

It varies from state to state but is charged at around 0.015% for the buy transactions of delivery trading.

Depository Charges

These are fees for maintaining your demat account. They range from ₹300 to ₹750 annually.

When combined, these charges can add up to approximately 0.5% to 0.7% of your transaction value. These all charges (whichever applicable) plus your brokerage charge, are the total charges that you pay for stock market transactions. As discussed, some of these are fixed charges and some vary.

Brokerage varies depending on the type of broker you have opted for.

Understanding brokers' service and brokerage charges, along with other charges, is of utmost importance. You must pay these charges irrespective of whether you make a profit or a loss. If your trade is making a profit, these charges will claim a certain percentage of it and if you are making a loss, these charges will create a further dent in the capital.

About Author

Pradnya Surana

Sub-Editor

is an engineering and management graduate with 12 years of experience in India’s leading banks. With a natural flair for writing and a passion for all things finance, she reinvented herself as a financial writer. Her work reflects her ability to view the industry from both sides of the table, the financial service provider and the consumer. Experience in fast paced consumer facing roles adds depth, clarity and relevance to her writing.