Blog #21 - Reality Behind Zero Brokerages

In last few years, a noticeable increase in demat accounts is seen. This increase is not usual it is contributed by many things like pandemic, online platform has been increased, easy money transfer etc. If I go in past, 5 years back, these things was not usual. In that time if you have Rs. 20000 then around Rs. 6000 was used in only account opening. Even the process of opening demat account was not easy, things are going to change. In this, competition among brokers has been increased, they are offering many schemes to lure customers and one of the factors is brokerage charges. They are offering zero brokerages, no charges on delivery shares etc. Now in all these it is our duty not to get trapped. There was some charges on demat account like service charge, maintenance charge, brokerage etc. It was like entry barrier to the share market.  In present time there is a craze of share market among people especially young generation and the interest is driven by digital era, low brokerage charges etc. Is it okay to invest blindly based on these schemes? Let’s find out.

 

What are hidden charges?

 

 

In 1999 the use of seat belt became mandatory in all four automobiles and these results in the perception that now we are safe from road accidents but according to the reports there was slight increase in the accidents after the introduction of seat belts this is because we were careless in driving and overconfident at that time. In my opinion same case applies to brokerage industries because due to low charges we are making transaction blindly. On the other hand if I talk about last few years, people invested their money carefully because of brokerage charges. This move makes them to take decision wisely. Now due to less or negligible charges selling buying occurs frequently. There is some relaxation as it reduced the entry barrier for the new people but this had affected decision making of investors.  If there are some pros of low brokerage then also there are some cons. Even if a broker is charging zero brokerages but the Govt. doesn’t. Govt. authorities like SEBI and Stock exchanges took charges on these transactions. Today if you are investing 1 lakh rupees then on this amount you are paying substantial charges. 

 

Finance With Atul

 

 

You can compare brokerage charges from internet on the respective website of the platforms or simply there are many apps available on internet that can compare brokerages charges for various platforms. The main motive of this article is to put awareness among the people and young generation because the platforms are providing lucrative schemes to the customers to expand their business. Further these charges depend on the type of investing i.e. you are intraday trader, delivery or FNO. I have compared 3 brokers you can see their charges. I am comparing 5 paisa, Motilal oswal and Axis direct with a capital of Rs 100000.

 

 

	5 paisa	Motilal Oswal	Axis Direct
Brokerage Rate	10 Rs/order	40 Rs/order	25 Rs/order
Brokerage Applicable	10	40	25
STT	100	100	100
Exchange Charges	3	3	3
GST	2.34	7.74	5.04
SEBI charges	0.05	0.05	0.05
Stamp Duty Charges	15	15	15
Total Tax and Charges	130.39	165.79	148.09

 

 

You can clearly see the variation in charges for three brokers that’s why you should take good decision before choosing a trading platform. I made this comparison on the basis of intraday these charges vary according to the type of trading. So be careful before taking investment decision.

 

Hope You like the article.

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