There are a number of charges you pay on each stock trade you make. Although these charges are nominal, they do add up to substantial amounts when you trade in large numbers. On top of the charges you also have to pay capital gains tax on profits you make while trading stocks
There is usually an fee for opening an account to trade in the market. This ranges from Rs. 300 to Rs. 1000. ICICI Direct charges a fee of Rs. 750 while India Infoline charges 425. This entitles you to use the standard online website to begin trading. However to avail the features of specialized software, you may have to pay an additional fee. These applications are installed on your desktop unlike a website. This makes the response faster and do not need frequent page refreshes like a browser.
There are also charges for every buy and sell order you execute. This is called brokerage and ranges from 0.1% to 0.75% of your order value. ICICI Direct charges 0.75% per transaction, India Infoline and Sharekhan charge 0.5% and Motilal Oswal charges .4%. You will also have to pay an additional Service Tax of 10.2% on the brokerage amount and a Securities Transaction Tax (STT) of .1% on the total trade value.
Lets take an example. Suppose you buy 1000 number of a stock costing Rs. 50 per stock.
Total Value of the transaction – Rs. 50,000
Brokerage (0.5%) – Rs. 250
Service Tax (10.2%) – Rs. 25.5 – This is on the brokerage.
STT (0.1%) – Rs. 50 – This is on the total trade value