A Trading account is a medium through which you can trade in stocks and mutual funds in the Stock Market. In the era of rapid digitization following COVID-19, opening a Trading account has become much easier and faster.
When one wants to trade in shares, they have to register with a broker who is listed with a Depository Participant, which in turn is authorized by SEBI (the regulating authority) to transact shares on behalf of the investors.
These brokers charge a minimum service fee on the transaction, known as brokerage fees. These fees vary from broker to broker. And while the range of the charges may be more or less the same, you can save more by opting for a low brokerage trading account.
Let us understand the various Trading account charges:
Account opening charge
This is a one-time charge applied by the broker, which is around ₹500 to ₹1000, depending on the broker. With this, you get a demat account that you can access using login credentials and a customer ID specifically assigned to you.For example - Upstox account opening charges are just ₹249.
Annual Maintenance Charge (AMC)
This is a yearly charge that you pay for the services provided by your broker - to enjoy a powerful platform, an easy investing experience, satisfactory customer services and others.
Equity intraday/delivery charges
While trading in shares, there are two options: buying and selling the share within a day or holding the share for more than a trading day. Buying and selling a share on the same day is known as intraday trading, while a transaction held for a longer time is known as delivery trading.
The nominal rate of intraday trading is ₹20 per transaction or 0.03% to 0.10% of the transaction value (whichever is lower).
Usually, for equity delivery trading, you need to pay a flat fee of Rs. 20 per transaction.
Here the low brokerage Trading account comes very handy in saving on brokerage for bulk or large transactions.
Options trading
Normal trading in shares is known as equity share trading. On the other hand, when you opt for option share trading, you buy the right to sell or buy the share but are not obligated to do so. It is a transaction that will be executed in the near future depending on the share price. If you say it will increase, you can opt for a call option (buy the share) and if you think it will decrease, you can opt for a put option (sell the share). This is known as the put/call option. For such transactions, the brokers charge a fee of ₹20 per transaction.
Commodity trading
This is a trading platform where you deal in commodities such as gold, silver, turmeric, crude oil, and others, instead of shares and stocks. Similarly, with Commodity trading, brokers charge a nominal amount of ₹20 or 0.05% of the order value – whichever is lower.
All these transactions are subject to 18% GST as it is a service provided by the broker.
The charges mentioned above are those levied by the broker. There are other charges as well by governing authorities. BSE or NSE charges a minimal trade execution charge of 0.00345% of the value of the transaction. SEBI also charges ₹10 per crore on the transaction. These are some of the major Trading account charges you will incur when opening a Trading account.