How trading costs are split across govt taxes, brokerage?
Trading activity has once again picked up on the stock exchanges. The number of new demat accounts hit a 13-month high in June after 2.36 million new accounts were opened last month, taking the total tally to 120.5 million. This renewed investor interest comes in the wake of a run-up in the stock markets, which have reached new highs.
Apart from brokerages, the government also benefits when stock markets see wide investor and trader interest.
According to estimates by Fisdom, the central government is estimated to collect around ₹25,113 crore in securities transaction tax (STT) alone in FY23.
Brokerage is estimated at ₹29,000 crore, and exchange transaction charges of ₹10,334 crore. The goods and services tax (GST), which is 18% for financial services, is estimated to be ₹4,776 crore.
A majority of the STT collections come from the futures and options (F&O) segment, which accounts for a large chunk of the stock market volumes.
If the trading volumes remain the way they were in FY23, the STT collections could even be higher in FY24 as the government has increased the STT charges.
The government hiked the STT charged on options from 0.05% to 0.0625%. Earlier, STT on turnover of ₹1 crore was ₹5,000. After the revision, this increased by 25% to ₹6,250.
The STT on futures was hiked from 0.01% to 0.0125%. This was earlier ₹1,000 on a turnover of ₹1 crore, which was increased by 25% to ₹1,250.
The depository participant (DP) charges, estimated from trading activity on the National Stock Exchange (NSE) for FY23, comes to ₹2,840 crore.
DP charges are what the brokerages need to pay to depositories— National Securities Depository (NSDL) or Central Depository Services (CDSL)— where investors’ securities are held.
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