GST on broking charges in India

Overview

Goods and Services Tax (GST) at 18 percent is levied on the service charges associated with securities trading in India. At Zerodha, GST applies to three components: brokerage, exchange transaction charges, and the SEBI turnover fee. It does not apply to Securities Transaction Tax, stamp duty, or the IPFT levy, which are statutory taxes or trust levies, not service fees.

For most active traders, GST on broking charges is a meaningful cost component. On large trades where brokerage is Rs 20 and exchange charges might be Rs 5, GST adds Rs 4.50 to the total debit. On delivery trades where brokerage is zero, GST is charged only on the exchange charge and SEBI fee, reducing to approximately Rs 0.55 per Rs 1,00,000 of turnover.

Legal framework

GST on financial services is governed by the Central Goods and Services Tax Act 2017 (CGST Act) and the Integrated Goods and Services Tax Act 2017 (IGST Act). Stock broking is classified as a “financial service” under the GST framework. It is a taxable supply under Section 9 of the CGST Act (for intra-state transactions) or Section 5 of the IGST Act (for inter-state transactions).

The applicable SAC (Services Accounting Code) for stock broking services is 997152 – Services provided by stockbrokers, sub-brokers, and investment agents. The tax rate on this SAC is 18 percent (CGST 9 percent + SGST 9 percent for intra-state; IGST 18 percent for inter-state).

Place of supply

The place of supply for stock broking services is the location of the service recipient (the client). If Zerodha is registered in Maharashtra and the client is in Maharashtra, CGST and SGST are both charged (9 percent each). If the client is in another state, IGST at 18 percent is charged instead. The total tax rate is the same; the difference is how it is apportioned between centre and state.

What attracts GST

Brokerage

Brokerage charged by the broker (Zerodha) is the primary service fee and is taxable at 18 percent. For intraday or F&O trades where brokerage is Rs 20 per order, GST on brokerage is Rs 3.60 per order. For delivery trades where brokerage is zero, there is no GST on brokerage.

Exchange transaction charges

Exchange transaction charges (NSE, BSE, MCX) are also taxable at 18 percent even though the exchange, not the broker, levies them. This is because the exchange’s services are treated as a service received by the broker, which the broker then passes to the client. In practice, the GST on exchange charges is included in the consolidated “GST” line on the contract note.

SEBI turnover fee

The SEBI turnover fee is also subject to GST at 18 percent. The SEBI fee is a service-related regulatory charge (not a statutory tax), and therefore falls within the GST net.

What does not attract GST

Securities Transaction Tax and CTT

STT and CTT are statutory taxes levied under the Finance Act. Taxes levied by the government are not “consideration for a supply of service” and therefore fall outside the GST net. GST is not charged on STT or CTT.

Stamp duty

Stamp duty is a state-level duty under the Indian Stamp Act. It is not a service charge and is not subject to GST.

IPFT levy

The Investor Protection and Education Fund Trust levy is a trust levy deposited into the IPFT. It is not a consideration for a service and is not subject to GST.

DP charges

Depository participant charges paid to CDSL (through Zerodha as DP) are also subject to GST. This is a separate service (depository services), not the trading service. The DP charge of Rs 13.50 per ISIN carries GST at 18 percent, making the total Rs 15.93.

Calculation examples

Intraday trade (Rs 2,00,000 turnover, NSE)

Delivery trade (Rs 1,00,000 turnover, NSE)

Nifty options trade (Rs 10,000 premium, NSE)

GST credit: can traders claim input tax credit?

Registered GST taxpayers who carry out taxable supplies can claim input tax credit (ITC) on GST paid on inputs. However, most retail investors and traders are not registered under GST (individual annual turnover threshold for mandatory registration is Rs 20 lakh for services in most states). They cannot claim ITC on GST paid on brokerage.

For institutional investors and broking firms that are GST-registered and conduct securities transactions as part of taxable business activities, ITC eligibility depends on the nature of their supplies. Securities trading is treated as “exempt supply” for GST purposes (buying and selling of securities is not a “service” under GST – only the broker’s service is taxable, not the securities themselves). This means a GST-registered trader whose principal activity is trading securities typically cannot claim ITC on GST paid on brokerage because the output (securities sales) is exempt.

Proprietary trading firms registered under GST need specialist advice on ITC eligibility, which depends on whether they have any taxable output supplies against which ITC can be set off.

GST on Zerodha subscription products

Zerodha’s Kite Connect API (for algorithmic trading) and some premium products carry their own GST implications. API charges are subject to 18 percent GST as software/technology services. The account maintenance charge (AMC) levied by CDSL through Zerodha also carries 18 percent GST.

Historical context: service tax before GST

Before GST replaced the indirect tax system on 1 July 2017, broking services were subject to Service Tax at 15 percent (14 percent base + 0.5 percent Swachh Bharat Cess + 0.5 percent Krishi Kalyan Cess). The transition to GST at 18 percent represented an increase of 3 percentage points in the service tax burden on brokerage. However, the extension of GST to exchange charges (which were not subject to service tax under the pre-GST regime in the same manner) meant that the overall GST impact on trading costs was more complex than a simple 3 percent increase.

Reporting GST for tax purposes

For income tax return filing:

• Investors (capital gains regime): GST on brokerage forms part of the overall transaction cost. It is not separately deductible but reduces net proceeds or increases cost of acquisition.
• Traders (business income regime): GST paid on brokerage and exchange charges is deductible as a business expense.

GST paid on brokerage is visible on each Zerodha contract note and is summarised in the tax P&L report available on Zerodha Console, which can be downloaded in PDF or Excel format for use by tax preparers.

See also

• Zerodha brokerage structure overview
• Exchange transaction charges
• SEBI turnover fee
• STT and CTT on Zerodha
• Stamp duty by segment
• DP charges on Zerodha
• AMC at Zerodha
• SEBI
• Zerodha

References

1. Central Goods and Services Tax Act 2017, Section 9
2. Integrated Goods and Services Tax Act 2017, Section 5
3. GST Rate Schedule for Services, Notification No. 11/2017-CT (Rate), as amended
4. SAC 997152 – Stock broking services
5. SEBI Master Circular for Stock Brokers, SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/72
6. Zerodha Charges page, support.zerodha.com/category/charges (accessed May 2026)
7. CBIC Circular on place of supply for financial services