Understanding BTST Trading Charges in India

BTST (Buy Today, Sell Tomorrow) trades are a popular trading strategy in the Indian stock market, offering traders the flexibility to buy shares on one trading day and sell them the next. However, just like any other trading activity, BTST trades come with associated costs. In this article, we will break down the various charges and taxes that may be applicable for BTST trades in India.

1. Depository Participant Charges (DP Charges)

Depository Participant (DP) charges are typically associated with the transfer of securities between accounts. For BTST trades, there are generally no DP charges if the shares are sold before the settlement date. However, if you hold the shares beyond the settlement date and then sell them, DP charges may be incurred upon the transfer of shares.

2. Brokerage Charges

Brokerage fees can vary significantly depending on the brokerage firm and the type of trade. For BTST trades, common brokerage rates range from 0.01% to 0.5% of the transaction value, with lower rates for equity trading and higher rates for derivatives. Here's a more detailed look at what you might expect:

Example Calculation:
Assume a transaction value of INR 1,00,000: Brokerage (assuming 0.1%): INR 100 STT (Securities Transaction Tax, sell side, 0.1%): INR 100 GST (Goods and Services Tax, on brokerage, 18%): INR 18 Transaction Charges (approximately 0.003%): INR 3
Total Charges: INR 321

3. Other Mandatory Charges

Aside from DP charges and brokerage, several other mandatory charges apply to BTST trades in India, including:

Securities Transaction Tax (STT)

STT is applicable on both the buying and selling of shares. For equity delivery trades, the STT rate is 0.1% on the sell side.

Goods and Services Tax (GST)

GST is charged on brokerage fees at a rate of 18%, applying to the brokerage charges.

Transaction Charges

Exchanges levy transaction charges, which are typically a small percentage of the trade value.

Stamp Duty

This charge varies by state and is applicable on the purchase of shares. It is usually a small percentage of the transaction value.

Recent Changes and Updates

On June 8, 2021, a change was made to include DP charges for BTST trades. If you hold shares beyond the settlement date and then sell them, DP charges may apply.

Conclusion

BTST trades involve various charges and taxes that can impact your trading costs. While there may not be a DP charge for BTST trades, it's crucial to be aware of all these charges and to consult your brokerage for specific rates and charges, as they can vary significantly.