A brokerage fee is a charge that is levied by a broker for executing or assisting in the execution of transactions between a buyer and a seller. Such charges are levied for carrying out business in the capital market, insurance and real estate transactions. This charge is also called a commission.
Brokerage Plans
For transactions in the stock market, the investor has a choice of plans:
- Pay as you Trade – the charges are paid for each delivery trade at a specified percentage subject to minimum amount. For example, the charges may be 0.50% subject to a minimum of Rs.250/-;
- Pre-paid brokerage –the investor pays an amount in advance. The per trade charge are lower and adjusted against the amount prepaid. The prepaid sum has a validity period and the balance is not carried forward if it is not adjusted during the validity period. The higher the advance payment, the lower the per trade charge;
- Fixed pay per trade – charges are fixed for each order executed and the value of the transaction is not relevant. Depending upon the value, there may be substantial savings compared to ‘pay as you trade’
Additional charge
In addition to the brokerage fee, investors would also be liable to pay the securities transaction tax and service tax on the brokerage fee.
