Trading Charges Explained:
STT, Brokerage & More
Every derivatives trade in India carries five to seven separate charges. Most traders focus only on brokerage — but the full cost picture determines whether a strategy is actually profitable.
Why trading charges matter more than most traders think
When a new options trader buys a NIFTY call for a ₹50 premium, they often think their total cost is ₹50 × 75 = ₹3,750. The real cash outflow is higher, and the breakeven point of the trade shifts accordingly. Understanding every line item on your contract note is the first step toward accurate position sizing and realistic profit targets.
Indian equity derivative trades attract at least five separate charges: brokerage, exchange transaction charges, Securities Transaction Tax (STT), SEBI turnover fee, Goods and Services Tax (GST), and stamp duty. Each one is calculated on a different base and in a different direction.
Brokerage
Brokerage is the fee charged by your broker for executing the trade. Discount brokers (Zerodha, Upstox, Angel One, etc.) typically charge a flat fee per executed order — commonly ₹20 per order, regardless of order size. Full-service brokers may charge a percentage of turnover. For options, "turnover" is calculated on the premium value (not the notional value of the underlying), so percentage-based brokerage is usually cheaper on high-premium trades.
Brokerage is charged on both the buy leg and the sell leg. A round trip (buy then sell) therefore attracts brokerage twice.
Securities Transaction Tax (STT)
STT is a government levy collected at source by the exchange. For equity options on NSE/BSE, STT applies only on the sell side and is calculated on the premium value at the time of sale. The rate is set annually in the Union Budget and has changed multiple times over the years — always verify the current rate.
There is a critical exception: if an options contract expires in-the-money (ITM) and is physically or cash-settled on expiry (exercise), STT is charged on the full intrinsic settlement value rather than the remaining premium. For deep ITM options, this can result in an STT bill many times larger than the premium collected. This is why experienced traders close ITM options before expiry rather than letting them exercise automatically.
Exchange transaction charges
NSE and BSE charge a transaction fee on every trade. For equity derivatives on NSE, the rate applies on the premium turnover for options and on notional turnover for futures. BSE rates differ. These fees are small per trade but compound across a high-frequency strategy.
SEBI turnover fee
SEBI charges a small fee on all equity derivatives trades as a regulatory levy. It is applied on turnover and is very low (currently ₹10 per crore of turnover), but it appears as a separate line on every contract note.
Goods and Services Tax (GST)
GST at 18% is applied on the combined value of brokerage and transaction charges. It is NOT applied on STT or stamp duty. On a trade with ₹20 brokerage and ₹15 in transaction charges, GST adds ₹6.30. Across hundreds of trades a month, GST adds up meaningfully.
Stamp duty
Stamp duty is charged only on the buy side of a trade. The rate for equity options is 0.002% of the premium value; for equity futures it is 0.002% of the notional turnover. Rates are prescribed by the central government (uniform post-2020 reform) and appear as a separate debit on your ledger.
A worked NIFTY options example (hypothetical)
Suppose you buy 1 lot (75 units) of a NIFTY call option at a premium of ₹100 and sell it later at ₹140 (hypothetical prices, for illustration only). Here is how the charges stack up approximately:
- Brokerage: ₹20 (buy) + ₹20 (sell) = ₹40
- STT (sell side only): 0.0625% × (₹140 × 75) = 0.0625% × ₹10,500 = ₹6.56
- NSE transaction charge (buy + sell): approx. 0.05% × (₹7,500 + ₹10,500) = ₹9.00
- SEBI fee (buy + sell turnover): negligible, approx. ₹0.18
- GST at 18% on brokerage + transaction charge: 18% × (₹40 + ₹9) = ₹8.82
- Stamp duty (buy side only): 0.002% × ₹7,500 = ₹0.15
Total charges: approximately ₹64.71. Gross P&L on the trade: (₹140 - ₹100) × 75 = ₹3,000. Net P&L: ₹3,000 - ₹64.71 = ₹2,935. Charges were about 2.2% of gross profit here because the move was large. On a smaller move, the ratio worsens significantly. Use TradePulse's brokerage calculator to model your actual numbers before entering a trade.
Futures charges vs options charges
For futures, the key difference is that STT and exchange transaction charges are applied on notional turnover (contract value = lot size × futures price), not on the margin you put up. This makes per-unit charges much higher in absolute rupees on futures than options, even though they are lower in percentage terms. See Options vs Futures for a full comparison.
Common mistakes
- Ignoring the ITM expiry STT trap. Letting a deep ITM option expire exercised triggers STT on the full settlement value, which can wipe out most of the profit. Always close ITM options before the last 30 minutes of expiry day if you do not intend to exercise.
- Comparing brokers only on headline brokerage. The exchange fees, STT and GST are identical regardless of broker. Compare the total cost per trade, not just the broker's own fee.
- Over-trading to make up losses. Each additional round trip adds charges. Frequent trading magnifies the charge drag on your capital.
- Forgetting charges when calculating your breakeven. If you buy an option for ₹50 per unit, your breakeven at expiry is not strike + ₹50 — it is strike + ₹50 + per-unit charges.
Frequently asked questions
What is STT on options?
Securities Transaction Tax on equity options is charged on the sell side, calculated on the option premium value. If an ITM option is exercised at expiry rather than squared off, STT is charged on the full intrinsic settlement value — which is usually far larger than the premium. This is a costly trap for traders who forget to close ITM positions before expiry.
Why is the actual brokerage higher than the advertised flat fee?
Flat-fee brokers show only their own per-order charge. On top of that, you pay exchange transaction charges, SEBI fee, GST on brokerage and transaction charges, STT, and stamp duty — all separate line items on your contract note. The combined outgo is always higher than the headline number.
Is stamp duty charged on both legs of an options trade?
No. Stamp duty applies only on the buy side of a trade, at 0.002% of the premium value for equity options. The sell side is exempt from stamp duty.
How do trading charges affect my breakeven on an option?
Every rupee in charges raises your effective breakeven. On a small-premium, short-dated option, total charges can represent 3–8% of the premium itself. Always compute net breakeven (including all charges) before entering a trade, not after.
Calculate your real trading cost
TradePulse's brokerage calculator lets you model charges before you place any order — so your P&L targets are grounded in reality.