I was using the brokerage calculator provided by Zerodha, to run some imaginary trades that I wish to set up in the far far future. One of the trade was-
Buy 10,000 shares @150 sell @160.
The STT charge for intraday equity was 3100 and STT charge for futures was 180.
Why is STT charge for equity so high? Is there some positive reason behind this?
Shouldn’t this charge be reverse, high for futures low for equity?
I ask this question because, as far as I can tell I think only small traders dabble in equity and, futures is the arena for the pros. Since it is widespread knowledge that equity is safer than most, shouldn’t the charge be low so as to help small traders grow???
Also when small traders who want to get rich quick get to learn this fact. Wouldn’t they jump the gun and start trading in futures. Which could lead to huge losses in turn giving a bad name to this profession?
Thanks.
Edit: In the above imaginary trade, it was actually an equity delivery trade and STT for delivery stood at 3100. Even so, intraday equity STT stands at 400 and, 180 is for futures for the same. Still equity is alot higher. Irrespective of intra or delivery.
@nithin
With all due respect sir.
I know of the charge list. I think I read it somewhere in the brokerage calculator page, also one of the old answers written by you also had the same.
The question is WHY is it so high for Intraday equity why not reverse or equal to that of futures. Since small traders mostly tend to stick to equity wouldn’t it make sense for the STT to be low for equity. Frequency of transaction could be really high for equity that would mean a lot of STT i.e. less profit. Making the market seem like an unattractive place. Hence most small traders would end up quitting the market. So, Why?
What I was referring to was that Intraday equity is 2.5 times as compared to futures. Not the almost 20 times that you are referring to (3100 and 180).
STT on futures was 0.017% when introduced over 15 years back. It has slowly come down to 0.01% as volumes in futures shot up significantly, but for equity intraday hasn’t. I think reason for this is intraday trading is considered speculative business because there is no intention to hedge or take delivery of the underlying. Even in taxation, all profits from intraday is considered speculative income (other such income are winning in lottery, horse race, etc). Govt will always put higher taxes on these.
With F&O, there are hedgers, arbitrageurs, and the way the product is designed means there is an eventual delivery associated if you trade in them. (Theoretically, but not practically).
Btw if you want to understand the taxation difference, check this module.
@siva-reddy
I don’t think it’ll happen anytime soon. It might be rude, disrespectful to say this but is the FM even paying any attention to the needs of the stock market?
I mean, traders and investors don’t even have a dedicated business code. Lol. Sad. Do they even worry and think before deciding these rates?
(Apologies for saying something this disrespectful.)
@nithin
Sir, I realised my mistake in the above post(and made an edit accordingly) but even in intraday equity the STT is still alot higher.
Since future rates was corrected I wish the same would happen in equity.
I have a small capital of almost 2lkh. I make frequent trades my STT shoots up and I end up with less profit.
This is a respectful profession. You can be a stay-at-home dad or mum and earn money. You can be a college student and with the knowledge and right companies you could earn quiet an amount. It could ease some load off of your parents. I see alot of potential in the stock market.
I wish that these rate updates would become more logical and frequent and hope our FM will do something about it. Hopefully soon.