What would be the STT in case of purchase/sale of shares on delivery based transactions?
In rediff site it is given as
a) Purchase/Sale of equity shares, units of equity oriented mutual fund (delivery based) -- 0.10%
b) Sale of equity shares, units of equity oriented mutual fund (non-delivery based) -- 0.02%
Is this correct? Any changes in tax rates?
It is a June 2009 article. Was there any change after that?
Is STT calculated on the total amount(i.e., including brokerage charges and ST charges)?
Also, can you tell me the rate for calculating Stamp Duty and Transaction Charges?
Following few things about day trading brokerage and taxes calculation
- The current maximum intraday brokerage offered is 0.05% for buying and 0.05% for selling (you may
even have less brokerage and if you are paying more brokerage then you should either negotiate or
change your broker)
- The service tax is of 12.36% only on brokerage.
Learn how to take profit in day trading
Learn how to take profit in day trading
Take small profits and do multiple trades
How much you earn in a month with the investment of Rs.10, 000?
How to minimize the losses in day trading
Tips for buying and selling to do multiple trades in day trading
Take small profits and do multiple trades
The successful strategy for day trading is to take small profits and do multiple trades.
Basically it has been observed that many times traders especially day traders loose money due lack of knowledge.
For example - Suppose if day traders buying price is at Rs.200 then he waits till the price goes to minimum Rs.204 or Rs.205 and then they will plan to book profit, which is highly impossible on very frequent basis in single trade or in single move.
If you are expecting Rs.4 to Rs.5 as profit on share price of Rs.200 in single move then you are expecting 2% profit in single trade. So do you think it is convincing you?
We feel this doesnt sound practical and this is the reason why traders loose money after waiting for long time.
- The STT (Security Transaction Tax) is of 0.025% only selling amount.
- The stamp duty on total turnover for a day which is 0.002%.
- and finally you have to pay Regulatory charges on total turnover for a day which is 0.004%
Dont worry these all taxes will add up to very small amount at the end of the day compared to your profits in thousands.
Now lets see how to take small profit which will add up to big amount at the end of the day by doing multiple (more then one) trades.
Example - Buy KotakBank at Rs.315, quantity - 100 i.e. Rs.315 x 100 = Rs.31500.
So if you have Rs.10, 000 in your trading account you can do day trading because you get margin on your available amount for day trading.
Some brokers provide 3 or 4 times or even higher margin amount.
So you bought Kotakbank at Rs.315, Qty - 100 i.e. Rs.315x100 = 31500 and sold it at Rs.316.
You took only Rs.1 as profit for Rs.315 share price and you sold 100 shares so your profit is Rs.100.
So you get Rs.100 as profit in single trade.
Now lets calculate how much you have to pay as brokerage and taxes and finally how much you will get as your net profit behind this single trade.
Your buying amount is
= Rs.31500 (Rs.315x100 Qty shares)
= 0.05% as brokerage (we took it maximum brokerage but you may have even less) on 31500 which comes to Rs.15.75
= you have to pay service tax of 12.36% only on brokerage
= so 12.36% on Rs.15.75 comes to Rs 1.92
The total brokerage + service tax on buying is Rs.15.75 + Rs.1.92 = Rs.17.67
Now lets calculate the brokerage and taxes on selling amount
= you sold KotakBank shares at Rs.316, Qty - 100 so the amount comes to Rs.31600 (Rs.316 x 100 Qty shares)
= 0.05% brokerage on 31600, comes to Rs.15.8
= service tax 12.36% on brokerage comes to Rs.1.93
You have to pay STT (Service Transaction Tax) of 0.025% on selling amount which comes to Rs.6.32.
So total brokerage + taxes you have to pay for selling is
= Rs.15.8 + Rs.1.93 + Rs.6.32
= Rs.24.05.
Total amount you have to pay on buying and selling is
= Rs.17.67 (buying) + Rs.24.05 (selling) = Rs.41.72.
You also have to pay stamp duty and regulatory charges on total turnover.
Your total turn over is calculated by adding the buying amount and selling amount.
Buying amount is 31500 and selling amount is 31600 which adds up to Rs. 61300
Stamp duty - 0.002% and Regulatory charges - 0.004% adds up to 0.006%
On total turnover amount (Rs. 61300) the taxes comes to Rs 3.8.
So the total amount you have to pay including brokerage and taxes is only Rs 41.72 + 3.8 = 45.52
So now the conclusion is you are paying Rs.45.52 while you earned the profit of Rs.100.
So dont you think more then 50% profit in single trade is quite enough to do thousands per day.
If you continue doing such small trades with such small profits then it will end up with big amount at the end of the day.
Suppose if you do 10 trades in a day which is quite possible to add up to Rs.500 per day (Rs.50 per trade as per above example).
Now lets see how to do thousands with same strategy as mentioned above. Its simple you just have to increase your quantity of shares.
In our previous example you have brought only 100 quantities, if you make it double then your profit will also get doubled.
Vinothbabu