A Guide to Using Equity Brokerage Calculator

The mindset of Indians regarding the stock market is evolving and becoming more positive. Every day, more and more people enter the world of investment, so much so that from March 2020 to March 2024, the number of NSE-registered investors has almost tripled to 9.2 crore.🚀

People are finally shedding their biases about the stock market and upgrading from investing in gold and Fixed Deposits (FDs) to something that can actually grow their wealth.
The stock market can be super exciting, and sometimes, people forget that it's not without its costs. 

But what if you always knew how much of your money would be spent on covering the trading cost? Yep, there's a tool for that! 

The tool: Equity Brokerage Calculator and here's why you should use one.

Table of Contents

1. What is an Equity Brokerage Calculator?
2. What is the Importance of Using an Equity Brokerage Calculator?
3. What are the Key Components of an Equity Brokerage Calculator?
4. How to Use a Brokerage Calculator?
5. What are the Benefits of Using a Brokerage Calculator?

What is an Equity Brokerage Calculator?

An Equity Brokerage Calculator is a tool that will help you find exactly how much a trade would cost you so you can enter an equity transaction with the precise knowledge you need to make a well-educated investment decision. It accounts for various charges imposed by brokers, including brokerage fees, transaction charges, Securities Transaction Tax (STT), stamp duty and other fees.

What is the Importance of Using an Equity Brokerage Calculator?

Using a brokerage calculator can completely change the way you trade. Here's how:

1. Assess the profitability of your trades: A brokerage calculator shows you the exact cost of every trade, allowing you to decide if a trade is worth it or not. This allows you to plan your trades better and avoid unexpected losses.
2. Compare different brokerage plans: All brokers are different, and some are more pocket-friendly than others. A brokerage calculator makes it easy to compare which broker costs the least.
3. Optimise your trading strategy: You can change your investment strategy once you know all the costs involved. By changing trade sizes, entry and exit points, and frequency of your trades, you can get the best possible profits.
4. Avoid unexpected costs: Nobody likes to pay more than they think they need to. Hidden charges can be really annoying, and they reduce your profits. You can skip any unpleasant surprises down the line with the help of a brokerage calculator.

What are the Key Components of an Equity Brokerage Calculator?   

Let us understand how exactly a brokerage calculator works by understanding its key components:

1. Brokerage Charges: You have to pay a fee to your broker every time you trade (buy or sell). Depending on your broker, this fee can be fixed or a percentage of the trade value.
2. Transaction Charges: You must pay a small percentage of the trade value as a fee to the stock exchange, the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE), where the trade occurs.
3. Securities Transaction Tax (STT): This is the tax you pay to the government every time you trade. It is a percentage of the value of the trade, the tax adds up as the number of transactions increases.
4. Stamp Duty: This is the tax you pay to the state. The stamp duty rate varies from state to state and from one trade type to another.
5. Other Charges: These are the charges you pay to cover the costs of regulatory bodies and taxes, such as the SEBI turnover fee and GST.
6. Break-Even Point Calculation: The break-even point is when you don't gain anything, but you don't lose anything, either. So, if you want to set a profit target, it’s important to calculate the break-even point.

How to Use a Brokerage Calculator?

Here's an example elaborating a step-by-step guide for using a brokerage calculator.

Let's consider the Zerodha Brokerage Calculator:

Mukesh wants to buy 30 shares of ₹1,500 each as an intraday trade on the BSE. In this example, the input values would be:

• Quantity: 30
• Price per share: ₹1,500
• Order Type: Buy
• Exchange: BSE
• Transaction Type: Intraday

Calculation of Turnover:

The next step would be to calculate Mukesh's turnover from this transaction. 

• Turnover: Quantity × Price per share
• Turnover: 30 × ₹1500 = ₹45,000

Brokerage Calculation:

Now, let's calculate how much brokerage Mukesh has to pay for this transaction. 

• Intraday Brokerage Rate: 0.03% on order value, capped at ₹20
• Brokerage: 0.03% of ₹45,000.00 = ₹13.50 

Statutory Charges:

He will also have to pay certain statutory charges; let's see how to calculate them:

1. Securities Transaction Tax (STT): Only applicable on sell side of the transaction, so ₹0.00
2. Exchange Charges: Calculated based on exchange rules, in this case, ₹1.35
3. GST (Goods and Services Tax): 18% of Brokerage + Exchange Charges = ₹2.67
4. SEBI Charges:  ₹0.02
5. Stamp Duty Charges: Tax levied by the state government here it's ₹1.35

Total Taxes and Charges:

So, how much does Mukesh have to pay in brokerage and statutory charges in addition to the turnover value?

Total Tax and Charges: Sum of all applicable charges
➡️ Brokerage = ₹13.50
      Exchange Charges = ₹1.35
      GST= ₹2.67 
      SEBI Charges= ₹0.02
      Stamp Duty Charges) = ₹1.35
      Total = ₹18.90

Net Debit:

The total amount Mukesh will have to pay to execute this trade is: 

Net Debit: Turnover + Total Tax and Charges
➡️₹45,000.00 + ₹18.90 = ₹45,018.90

Note: These charges may vary due to changes in taxes and brokerage plans.

What are the Benefits of Using a Brokerage Calculator?

Here's what using an equity brokerage calculator can help you with:

1. Cost-Benefit Analysis: Trading comes at a cost; it could either be a brokerage, a transaction fee, or any other fee or charges. This cost varies depending on which broker you choose, which state you live in and many other factors. With the brokerage calculator, you can get a detailed look at these costs, perform a cost-benefit analysis and ultimately compare whether the potential profits will be more than the costs. This way brokerage calculator helps you make an educated investment decision.
2. Profitability Assessment: We all want to earn profits from our investments. So, it becomes very important to know if a trade has the potential to earn profits or not. You can find out exactly how much a trade is going to cost by using a brokerage calculator and then compare it to the potential profits. This way, you can figure out which trades have more potential to earn you profit and focus on them.
3. Comparison of Brokerage Plans: Different brokerage firms offer different plans, and it can be quite tricky to figure out which plan suits you best. You can compare multiple plans and see all the costs involved with each broker with a brokerage calculator. This comparison makes it easy for you to choose a broker that fits your financial goals and trading style the best.
4. Effective Trade Planning: Planning trades becomes much easier when you know and understand trading costs. You can figure out which trade to execute when by using a brokerage calculator. It can also help you get a better grip of handling risks. It also levels up your trading performance, ultimately leading to more successful trades.

Conclusion

So, there you have it! Now you know what a brokerage calculator is and how it works. You can manage your trading costs using it and, ultimately, make better trading decisions.
So, use a brokerage calculator to find how much your next trade will set you back. In fact, do yourself one better and head to Select's brokerage calculators list. Try brokerage calculators of 25 popular brokers and compare what different brokers are charging you. After all, finding the right broker can make all the difference between profits and losses.