Lowest Brokerage Charges for F&O Trading

F&O trading in India is gaining popularity. And we have the data to prove it. In March 2024, the monthly turnover of the F&O segment was a whopping ₹8,740 trillion.

But it may not be for everyone. A SEBI study shows that between FY22 and FY24, 93% of individual traders in the equity F&O segment lost their money. Before jumping into the F&O wave, take a moment to think about brokerage charges, as they can significantly impact your investment journey. 

Let us tell you why. 

Usually, brokerage is ₹20 per trade. That might not sound like much, but for a trader making multiple transactions daily, it can add up fast and eat into your profits! 

That's why you need to understand the A-Z of brokerage, including how to find the lowest brokerage charges for F&O and keep more of your hard-earned cash in your pocket. So, let's get to it!

Coverings: 

• What is Brokerage?
• How are Brokerage Charges Calculated?
• What is the Maximum Brokerage a Broker Can Charge?
• How to Choose the Right Broker in Terms of Brokerage Charges?
• Brokers Charging Lowest Brokerage Charges for F&O
  • Shoonya 
  • Zerodha 
  • m.Stock 

What is Brokerage?

Now, before you get confused, the commission that you pay to your broker is a part of brokerage. It also includes other regulatory and statutory charges. Here's a breakdown of all the charges that make up the cost you end up paying for a trade:

A. Brokerage: The commission you pay to your broker for executing your trade is called a brokerage fee. And it varies across brokers. It is usually calculated as a percentage of your trade value or a flat fee per trade, whichever is higher. 

B. Regulatory and Statutory Charges: These are various fees and taxes imposed by government bodies and regulatory authorities. They include:

1. Securities Transaction Tax (STT): A direct tax you need to pay while trading equity securities on recognised Indian stock exchanges.

Equity Delivery	Equity Intraday	Futures	Options
0.1% (Buy and Sell)	0.025% (Sell)	0.02% (Sell)	0.1% (Sell)

2. Commodity Transaction Tax (CTT): This is similar to STT but applies specifically to commodity trading. 

Commodity Delivery	Commodity Intraday	Futures	Options
0.1% (Buy and Sell)	0.025% (Sell)	0.02% (Sell)	0.1% (Sell)

3. Goods and Services Tax (GST): It is applicable to the brokerage fees charged. And it is calculated as 18% of ( brokerage + SEBI charges + transaction charges).

4. SEBI Turnover Fee: A small fee levied by SEBI based on the total turnover of transactions.

Equity Delivery	Equity Intraday	Futures	Options
0.0001%	0.0001%	0.0001%	0.0001%

5. Stamp Duty: Stamp Duty is a state-level tax applied to securities transactions and varies from state to state in India. It varies as per the type of transaction and is only applicable to “Buy" transactions.

Equity Delivery	Equity Intraday	Futures	Options
0.015%	0.003%	0.002%	0.003%

6. Transaction Fees: These are fees charged by the NSE and the BSE for executing trades. They can vary based on the exchange and type of transaction.

Equity Delivery	Equity Intraday	Futures	Options
NSE: 0.00297% | BSE: 0.00375%	NSE: 0.00297% | BSE: 0.00375%	NSE: 0.00173% | BSE: 0	NSE: 0.03503% | BSE: 0.0325%

7. Depository Participant (DP) Charges: You need to pay these fees to maintain your Demat account and facilitate transactions in securities. 

8. Investor Protection Fund Charges: These charges contribute to the fund set up by exchanges to safeguard investors against defaults by brokers.

Equity Delivery	Equity Intraday	Futures	Options
0.0001%	0.0001%	0.0001%	0.0005%

Let's move on to how these charges are calculated.

How are Brokerage Charges Calculated?

As per SEBI regulations, the brokerage calculation has changed effective from October 2024. But, this is only for regulatory and statutory charges. The fundamental formula for calculating brokerage is still the same. The fee may be of two types depending on your broker:

• Flat Fees: A fixed fee per trade, regardless of the trade size. For example, a broker might charge ₹20 per executed order for F&O trades.
• Percentage-Based Fees: A percentage of the total transaction value. This can vary based on the type of trading. It is calculated as: Number of shares × Price per share × Brokerage percentage
• Hybrid Fee: This is a combination of sorts. The broker will charge you a flat fee or a percentage-based fee, whichever is lower. For example, 0.5% or ₹20. So, the maximum brokerage payable for any trade would be ₹20.

So, if you buy 20 shares at ₹1,000 each with a brokerage fee of 0.5% on the NSE, the calculation would be: 20 × ₹1,000 × 0.5% = ₹100
Let's follow this same example to understand the calculation of other fees as well.

Charge	Calculation	Fee
Brokerage	20 × ₹1,000 × 0.5%	₹100
STT is calculated as a percentage of the turnover	20 × ₹1,000 × 0.1%	₹20
SEBI Turnover Fee is calculated as ₹10 per crore.	20 × ₹1,000 × 0.0001%	₹0.02
Stamp Duty is calculated as a percentage of turnover.	20 × ₹1,000 × 0.015%	₹3
Transaction Fees	20 × ₹1,000 × 0.00297%	₹0.594
Investor Protection Fund Charges	20 × ₹1,000 × 0.0001%	₹0.02
GST	18% (₹100 + ₹0.02 + ₹0.594)	₹18
Total Brokerage Fee	Brokerage + Exchange Charges + STT + SEBI Charges + GST + Contribution to IPFT + Stamp Duty	₹141.634

Depending on your broker, a single trade can cost you over ₹140! 

If you make 20 trades a day, you'll end up paying ₹2,800 just in brokerage fees. Assuming that you make 20 trades a day for 252 days a year, then your brokerage fee will be as high as ₹70k. 

Now, imagine if your brokerage fee was capped at ₹20 per trade. Then, the total charges per year would be just around ₹30k. And if your broker offered ₹0 brokerage rates, it would be just around ₹20k. This is proof that your choice of broker significantly affects the fee you must pay. That's why it's so important to understand these charges. By factoring in these costs when planning trades, you can make more informed decisions and get the most out of your trades. 

What is the Maximum Brokerage a Broker Can Charge?

You may worry that your broker can charge anything as a fee. But that's not the case. As per SEBI guidelines, the maximum brokerage that a broker can charge should not exceed:

• 2.5% of the total value of the transaction for equity delivery
• 0.25% of the total value of the transaction for intraday trades

Hence, your broker cannot charge more than 2.5% or 0.25% brokerage. However, the minimum brokerage can be as low as zero. Now, let's understand how you can choose a broker that has the lowest brokerage charges for F&O.

How to Choose the Right Broker in Terms of Brokerage Charges?

We have covered how important it is to choose a broker that charges the lowest brokerage fees. Now, let’s understand how you can do so. Here are some steps you can consider:

• Identify if you are a long-term investor or a short-term trader, as different brokers cater to different trading needs.
• Check if they charge a flat fee per trade or a percentage of the trade value. And decide which structure will fit you best.
• Be aware of any additional fees that could affect your overall costs.
• Ensure the broker platform is suited to your trading style and needs.
• Confirm that the broker is SEBI-registered to ensure credibility and security.
• Research reviews and ratings from other traders to find out if the broker’s services will be fit for you. 

By following these steps, you can make an informed decision about which broker aligns best with your financial goals and trading preferences.

Brokers Charging Lowest Brokerage Charges for F&O

We have curated a list of brokers for you to consider with the lowest brokerage charges. 

• Shoonya
• Zerodha
• m.Stock

Each of these brokers offers different fee structures that cater to different trading needs.

1. Shoonya 

This broker is offered by Finvasia and caters to the needs of both traders and investors. It was launched with a focus on cost-effectiveness. Therefore, it provides a commission-free structure across various segments, making it particularly appealing to cost-conscious individuals.

Account Opening Charges	Account Maintenance Charges	Equity Delivery	Equity Intraday	Futures	Options
₹0	₹0	₹0	₹0	₹0	₹0

Shoonya is truly the cost-saving broker, offering the lowest brokerage charges. This means that you only have to pay regulatory and statutory fees applicable to trades. 

2. Zerodha

This is a leading discount broker in India, known for its low-cost trading services. It is best known for its speed and reliability. It also offers advanced charting tools and multiple investment options. Here's a look into it's brokerage charges:

Account Opening Charges	Account Maintenance Charges	Equity Delivery	Equity Intraday	Futures	Options
₹0	₹300	₹0	₹20 or 0.03%	₹20 or 0.03%	₹20

This makes it one of the most affordable options in the market, enhancing its appeal to cost-conscious investors.

3. m.Stock

This is another competitive broker offering low brokerage rates. It focuses on providing cost-effective trading solutions, allowing traders to execute F&O trades at minimal costs. It is a discount broker that offers a zero brokerage model with a one-time fee of ₹999. Zero brokerage means cost savings for investors.

Plans	Account Opening Charges	Account Maintenance Charges	Equity Delivery	Equity Intraday	Futures	Options
Free	₹0	₹480	₹0	₹20	₹20	₹20
Lifetime Zero Brokerage Plan	₹999	₹0	₹0	₹0	₹0	₹0

With the Lifetime Zero Brokerage Plan offering ₹0 brokerage across all sections, m.Stock is a great choice for frequent traders.

Conclusion

Now, you know all there is to know about brokerage, including how it is calculated. It is really important that you understand these charges if you want to earn profits in the stock market. 

We want you to make the most of your trades and investments. That's why we have reviewed some of the best brokers that offer low brokerage charges. But, it is important to do your own research. Compare your options, weigh the pros and cons, read user reviews and see how much they charge for every trade. You can do it all with Finology Select. Compare over 20 top brokers and pick the one that's the most suited to your needs.