In India, trading includes a brokerage charge. If you are willing to participate in trading, you need to do it via a broker, the middleman. Usually, the platform you use for trading is your broker registered with SEBI. In return for the trading facility, the traders have to pay a fee. Depending on different brokers, the charges and services may differ. This blog will help you know all about low brokerage trading accounts in India.
Types of Brokerage Fee Structures
Just like real estate where the broker charges fees on the property value, a trade broker charges fees on trade value. Brokers provide trading platforms, swift services, and added services to the traders. Hence, in return brokerage has to be paid by the investors.
You may wonder how brokerage is calculated. Here is how your broker may charge you:
- Fixed brokerage amount
Some brokers may charge a flat fee irrespective of the trading value or volume you execute. This may be ₹10, ₹15, ₹20, etc. It can be preferred by traders who are willing to trade high trade volumes.
- Fixed brokerage percentage
Another type of brokerage is where the broker charges a fixed percentage of the total trade volume or value. It may be 0.01%, 0.5%, or more. It may be a choice for traders looking for low brokerage, especially if they choose low trade volumes.
SEBI Regulations on Maximum Brokerage Charges
As mentioned before, brokerage and the services offered may differ from one platform to another. So, you may wonder about the maximum brokerage a broker can levy.
According to the SEBI guidelines, a broker can charge a maximum of 2.5% brokerage on trading. Usually, 2.5% brokerage is uncommon. However, depending on the services provided by the broker, it may go up to 2.5% of the trade value.
Components of Brokerage Fees
Brokerage fees may include more than just trade fees. Yes, depending on the broker, traders may have to pay certain additional fees. It may include inactivity fees for the period when the trading account was not in use, maintenance fees which may be charged annually, research and AUM (Asset Under Management) fees. To learn details, you must contact your broker.
Factors to Consider for Choosing a Brokerage App
As a trader, you need to assess multiple factors when it comes to selecting a broker. While brokerage is one of the essential factors, you cannot overlook other essential considerations. Here is how you can find the lowest brokerage trading account in India:
- Brokerage
The first and foremost is to know about the brokerage of a broker. A broker may charge as low as 0.01% or as high as 2.5% brokerage. So, choose one that suits your budget and financial goals.
- Other charges
Apart from brokerage, you must also consider the goods and services tax levied by the Indiana government. Currently, it is 18% of the brokerage.
- Hidden charges & offers
You need to learn in detail if there are any other fees charged by your broker. If so, calculating the same is crucial. Additionally, some brokers may also offer discounts and offers. So, you must also consider these while calculating the overall cost.
- Minimum balance
In some cases, traders may be required to maintain a minimum balance in their demat account. So, make sure you learn about the minimum balance requirement of your broker.
- Customer support
Customer service and support are essential factors to consider. It is always better to pay a little higher brokerage if the customer services and support offered are better. So, choose wisely!
Conclusion
You may compare different brokers to choose the best one. Before you finalize a broker, it is crucial to consider brokerage and other essential factors. Apart from brokerage, GST, hidden charges, maintenance costs, minimum balance requirements, and customer services are essential for a trader. For your ease, you may simply shortlist the ones in your budget and compare their services to choose the best one!
