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Section 1 · Module 1.6

Taxes & Trading Costs

6 min read

Round-trip cost lab

Toy estimates to feel friction — verify live rates with your broker. Not tax advice.

Brokerage (×2 sides, capped toy)
₹30
STT (illustrative)
₹50
Other + GST on fees
₹10
DP (delivery sell toy)
₹15

Est. friction ≈ ₹105 (0.21% of value)

Try it: Drag the slider — notice how % cost bites harder on small trades.

Why Costs Matter Before PnL

Remember: High turnover can look green on charts and still lose after STT + fees.

Every round trip has friction: brokerage, exchange fees, GST, stamp duty, and Securities Transaction Tax (STT). High turnover strategies can look profitable on charts but lose after costs.

Rates change — treat the figures below as a learning framework and verify current slabs on official / broker disclosures. This is educational, not tax advice.

Common Cost Line Items

  • Brokerage: Flat or %-based; often different for delivery vs intraday vs F&O.
  • STT: Levied on taxable securities transactions (rules differ for equity delivery, intraday, and options).
  • Stamp duty & exchange charges: Small per-trade charges collected via the broker.
  • GST: Applies on brokerage and some service fees.
  • DP charges: Debited when shares leave Demat on a sell (delivery).
Habit: before sizing a trade, estimate round-trip cost as % of capital at risk — then require your planned reward to clear that hurdle.

Capital Gains Basics (Equity)

  • STCG: Gains on listed equity held ≤ holding-period threshold (commonly discussed as short-term) taxed at special rates when STT conditions apply.
  • LTCG: Longer holding period; equity LTCG rules historically include an annual exemption threshold and a flat rate above it — confirm current Finance Act numbers each year.
  • Intraday equity is typically treated as business income, not capital gains — accounting differs.
  • Keep contract notes and broker tax P&L reports for ITR filing.

F&O Cost Mentality

Options pay STT on sell-side premium (and different rules on exercise/assignment). Frequent credit-spread or straddle flipping can erode edge quickly. Prefer paper practice on AI Options Traders before live turnover.

Knowledge check

Which of these is typically charged on equity delivery sells and reduces take-home proceeds?

Tap an answer — you get instant feedback.