Understand The Changes In NSE Transaction Charges, IPF Charges and STT Charges

Recently, a lot of changes are being brought in by the authorities to make the trading systems more transparent and to reduce the risk of system misuse. Under the same initiatives, the authorities have made changes to the NSE Transaction Charges, STT and IPF charges.

What are NSE Transaction Charges?

The NSE Transaction Charge is a type of fee charged by NSE to allow the customers and trading members to trade on the National Stock Exchange. It is the fees charged by the exchange to use the trading platform. Similar fees are charged by other exchanges too. The charges are decided by the exchanges and hence the rates for the same segment may differ across exchanges.

These charges can also be known as Exchange Turnover Charges as they are charged as some percentage of the total trading turnover. They are charged for both, buy and sell type of orders. These charges collected from the customers are passed on to the respective exchanges by the brokers as a fees for using the platform.

Changes in NSE Transaction Charges

In January 2022, NSE had raised the transaction charges by 6%. 

NSE has rolled back that increase wef 1st April 2023 as per NSE’s Circular No. NSE/FA/56129 .

Adhering to the above circular, the revised NSE Transaction Charges applicable for Paytm Money customers are given below:What are IPF charges?

NSE has established an Investor Protection Fund which compensates the customer if the defaulter’s assets are not sufficient to meet the admitted claims of the customers. This fund is also used to promote and encourage investor education, awareness and research. The IPF charges are charged through Investor Protection Fund Trust which ensures implementation of the above-mentioned responsibilities. The management of this fund is done by its Trustees. These trustees are a team of Public representatives, investor association representatives, Board Members and Senior officials of the Exchange.

Changes in the Investor Protection Fund (IPF) Charges

WEF 1st April 2023, NSE has increased the Investor Protection Fund (IPF) Charges from ₹ 0.01 per Crore of traded value to ₹10 per crore of traded value in Cash equities and Equity future market segments and from ₹0.01 per crore of the traded value (premium value) to ₹ 50 per crore traded value (premium value) in Equity Options.

Below given is the summary of revised IPF charges which will be charged on the Paytm Money platform adhering to the latest circular.Earlier, the IPF charges by NSE were negligible and were borne by Paytm Money. However, as mentioned above, wef 1st April 2023, NSE has increased the charges by 1000 times for Cash Equities and Equity Futures segments and by 5000 times for Equity Options segment. Due to the astronomical hike, Paytm money would not be able to bear these charges in future due to which they will now be borne by the customers. Accordingly, we will be including the said IPF Charges in the Exchange Transaction Charges in the contract notes.

What is Securities Transaction Tax?

Securities Transaction Tax (STT) is levied on the transaction of securities. This tax is applicable for buy and sell orders of the equity delivery segment, intraday equity sell orders, all Futures and options sell transactions. 

Changes in the Securities Transaction Tax (STT)

There’s been an increase in the Securities Transaction Charges (STT) on the sale of Futures and Options (F&O), vide BSE Circular No. 20230331-71 dated 31st March 2023. As per the same circular, STT of 0.0625% and 0.0125% of turnover will be charged on the sell orders of Options and Futures segment respectively.

Below given is the summary of the old and revised STT charges applicable on Paytm Money platform wef from 1st April 2023.