Creative accounting and cheating by some brokers

General
#1

I just saw a video by PR Sundar who says he has been cheated multiple times in F&O trades and his tone suggests this malpractice is common and that Brokers are largely dishonest.

Things like.

  1. Not crediting cash (he gave cheque)
  2. Charging brokerage 30,000 per Lot on a trade (attributed to computer glitch when confronted)
  3. Varying transaction charges.

Do you micromanage your trade costs, and ensure your settlements are correct or largely just hope your broker does it right.

This topic is more general in nature. Personally, seeing that Zerodha runs a largely uncensored public forum, I am inclined to think they have their heart in the right place.

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#2

Been with Zerodha for 1 year ,till now i only faced very small discrepancy in Zerodha which is of Rs 9+Gst the account transfer fee. Zerodha has policy if you transfer back the quarterly settlement money back in 3 working days you would get the transfer fee 9+GST reverted. But i had to raise the ticket ( after 6 months) to get the charges reverted. I will not see as cheating but might be some system issue which i think Zerodha should fix( if its really a issue)

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#3

I think we should check daily of all the transaction, it takes 2 mins

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#4

You should really check the contract notes and ledger. I do the same. Zerodha is really honest I feel. But I have noticed that they too charge more money in terms of STT and stamp duty.

What Zerodha does is this: in every contract note, they round off the STT and stamp duty charges. First of all there is no need to round them off. Everything is digital but they still do it.

But when you check the PNL TAX statement you will see that they report the total STT and stamp duty in three or four places of decimal. Now why is this so?
Why report in decimal in TAX statement but in round off way in contract notes?

I feel so what Zerodha is supposedly doing is that they are collecting higher STT and stamp duty from customer by rounding them off. But at the time of depositing the STT and stamp duty to government, they are depositing the lower but correct amount of what they should have charged in the very first place to their customers.

This is a minor issue I guess and I have noticed that all brokers round off the STT and stamp duty but not the other charges like GST, exchange charges etc so I guess all brokers are exploiting some loophole in our laws I guess.

I have only noticed that IBKR doesn’t round off the STT and stamp duty in their contract notes. I am not recommending Ibkr here but just stating the facts. In fact I love Zerodha and use their platforms for 90 percent of my trading.

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#5

@Pranav appreciate the level of detail. But like you yourself stated, that is actually a non issue :slight_smile:

So lot of us closely monitor all trade costs I suppose. Thats good. But I know some who don’t bother looking deeper.

#6

hey, STT is rounded off as per law: https://incometaxindia.gov.in/Rules/Securities%20Transaction%20Tax%20Rules,%202004/2010/103120000000004773.htm

The value of taxable securities transaction and the amount of securities transaction tax, interest and penalty payable, and the amount of refund due, under the provisions of Chapter VII of the Act shall be rounded off to the nearest rupee and, for this purpose, where such amount contains a part of a rupee consisting of paise then, if such part is fifty paise or more, it shall be increased to one rupee and if such part is less than fifty paise it shall be ignored.

So is Stamp duty. Here’s the NSE circular: https://www1.nseindia.com/content/circulars/CMPT43115.zip

image

As a matter of fact, Zerodha receives client-wise STT and Stamp duty files from the Exchange and merely applies the value as mentioned in the file. From the 1st of April 2020, the Stamp duty rates were revised and made the same across all states and the Exchanges were entrusted with the task of collecting the Stamp duty.

Zerodha merely acts as an agent and collects the applicable duties on the trades carried out by its clients and passes the exact same rupee value to the Stock Exchange.

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#7

@VenuMadhav Thanks for taking the time to really explain the thing. You guys are really transparent and honest. I love Zerodha. Sorry if you felt bad upon reading my comment.

I will suggest that in the Tax statements we download from console, you use the round off numbers as well for STT and stamp duty, so as to avoid this misunderstanding.

Thanks again for the explanation :grinning:

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