Reading a contract note, line by line
The single most useful document your broker sends you, and the one people delete unread.
Published 8 July 2026 · 5 min read
Why bother
A arrives by email on the evening of any trading day you traded. It lists the price, the quantity, and every individual charge deducted.
Reading one properly, once, is the fastest way to understand what trading actually costs. Most people discover two things: brokerage is often the smallest line, and a broker advertising zero brokerage has not made the trade free.
An illustrative note
A delivery purchase of Rs 1,00,000, sold later for Rs 1,10,000, at a discount broker charging nothing on delivery. Figures are illustrative and vary by broker and by state.
| Line | Roughly | Who takes it |
|---|---|---|
| Brokerage | Rs 0 | Your broker |
| STT on buy, 0.1% | Rs 100 | The government |
| STT on sell, 0.1% | Rs 110 | The government |
| Exchange transaction charges | a few rupees | NSE or BSE |
| SEBI turnover fee | a few paise | SEBI |
| Stamp duty, buy side only | about Rs 15 | State government |
| GST at 18% | a few rupees | The government |
| DP charge on the sale | commonly Rs 15 to Rs 25 | Depository and broker |
| Total | roughly Rs 250 to Rs 270 |
On a Rs 10,000 gain that is about 2.5% of the profit. Noticeable, and not damaging.
What each line actually is
- Brokerage. The only line your broker sets. Flat per order at discount brokers, a percentage at full service ones.
- STT. Securities transaction tax, charged by the government. Not refundable and not adjustable against your income tax. Delivery is 0.1% on both legs, intraday 0.025% on the sell side only.
- Exchange transaction charges. A small percentage of turnover, taken by the exchange.
- GST at 18%. Applied to brokerage and transaction charges. Not to STT or stamp duty. This catches people out when they try to reconcile the total themselves.
- SEBI turnover fee. A very small percentage, funding the regulator.
- Stamp duty. A state levy, charged on the buy side only.
- DP charge. Levied when you sell from your demat account, as a flat amount per company, per day, regardless of quantity or value.
The number that actually matters
Rs 250 on a Rs 1 lakh round trip is not the story. Frequency is.
These charges apply per transaction. An investor making four transactions a year pays them four times. Someone making two hundred pays them two hundred times, out of the same capital, before the strategy has earned anything at all.
This is the mechanism behind a SEBI observation that is easy to skim past: loss making traders placed more trades on average than profitable ones. Activity feels like effort. Costs are certain while profits are not, and frequency multiplies only one of them.
What to do with this
- Open the first three contract notes you receive. After that you will know what to expect.
- Check the total against the trade value to get your real all in cost as a percentage.
- Compare that percentage against the gain you were hoping for. If costs are a large share of the expected move, the trade was thinner than it looked.
- Notice which broker lines are avoidable. Brokerage and DP charges vary between brokers. STT and stamp duty do not.
Full breakdown in charges and costs.