IPFT levy on Zerodha trades
Overview
The Investor Protection and Education Fund Trust (IPFT) levy is a small charge collected by stock exchanges on every trade and deposited into the IPFT fund maintained under SEBI. The levy funds investor education, awareness campaigns, and investor protection initiatives conducted or supported by SEBI. At Zerodha, the IPFT levy is embedded in the “exchange charges” or shown as a separate sub-item on the contract note, depending on the contract note format.
The IPFT levy is among the smallest individual charges on a trading account, typically amounting to Re 0.10 per lakh of turnover in the equity cash segment and higher in the derivatives segment. Despite its small size per transaction, the levy aggregates to a substantial fund across the millions of daily transactions on Indian exchanges.
Legal basis
The Investor Protection and Education Fund was originally established under Section 11(a) of the SEBI Act 1992. SEBI restructured and expanded the fund in 2018 through the SEBI (Investor Protection and Education Fund) Regulations 2009 (as amended). The fund is maintained by a trust (IPFT), which is governed by a board of trustees appointed by SEBI.
The IPFT levy on exchange transactions was formalised through SEBI’s circular SEBI/HO/MRD/DRMNP/CIR/P/2018/107 (June 2018), which directed stock exchanges to collect the levy from their trading members (brokers) and deposit it into the IPFT.
Rates
| Segment | IPFT levy per side |
|---|---|
| Equity cash (delivery and intraday) | 0.0001% of turnover |
| Equity futures | 0.0005% of contract value |
| Equity and index options | 0.0005% of premium turnover |
| Currency futures | 0.0001% of contract value |
| Currency options | 0.0001% of premium |
| Commodity futures (MCX) | 0.0001% of turnover |
| Commodity options (MCX) | 0.0001% of premium |
The higher rate in the equity derivatives segment (0.0005% versus 0.0001% in equity cash) reflects SEBI’s policy of raising more IPFT funding from the higher-risk derivatives segment, consistent with the view that derivatives trading carries higher systemic risk and investor harm potential.
Absolute amounts
At the 0.0001 percent rate (equity cash):
- Rs 1,00,000 trade: Rs 0.10 per side
- Rs 10,00,000 trade: Rs 1.00 per side
- Rs 1 crore trade: Rs 10.00 per side
At the 0.0005 percent rate (equity derivatives):
- Nifty futures, 1 lot (contract value Rs 17,25,000): Rs 17,25,000 x 0.0005% = Rs 8.63 per side
- Nifty options, 1 lot at Rs 100 premium (premium Rs 7,500): Rs 7,500 x 0.0005% = Rs 0.04 per side
How the IPFT collects and disburses funds
The IPFT collection mechanism is:
- Exchanges deduct the IPFT levy from the brokerage/charges collected from trading members (brokers).
- Brokers pass this cost to their clients as a line item on the contract note.
- Exchanges remit the collected IPFT levy to the IPFT trust on a periodic (usually quarterly) basis.
- IPFT trustees disburse the funds for: (a) investor education programmes, (b) grants to market intermediaries for investor awareness, (c) refunds to investors with unclaimed securities (the IPFT and IEPF frameworks overlap in some cases), (d) legal aid to investors in disputes with intermediaries.
Relation to SEBI turnover fee
The IPFT levy and the SEBI turnover fee are two separate charges that are both small, both exchange-collected, and both regulatory in nature. They are sometimes confused or lumped together:
| Feature | SEBI turnover fee | IPFT levy |
|---|---|---|
| Rate | 0.0001% (uniform) | 0.0001% (cash); 0.0005% (derivatives) |
| Destination | SEBI’s general revenue | IPFT trust fund |
| Purpose | SEBI’s operating costs | Investor education and protection |
| GST applicability | Yes | Typically not (trust levy, not a service fee) |
The SEBI turnover fee is included in the GST base (brokerage + exchange charges + SEBI fee = GST base). The IPFT levy is generally not included in the GST base because it is a trust levy rather than a service fee.
How it appears on Zerodha’s contract note
On Zerodha’s contract notes, the IPFT levy is included as part of the “exchange charges” total or is shown as a separate sub-line depending on the specific contract note format in use. The Zerodha Kite app’s charge estimator shows the IPFT component when computing order costs. For precise IPFT amounts, clients can view the detailed trade report on Zerodha Console.
Investor education activities funded by IPFT
SEBI uses IPFT funds for:
- Investor awareness workshops conducted through registered investment advisors and market infrastructure institutions
- Publication of investor education materials (brochures, videos, online courses)
- SEBI’s SCORES investor grievance portal operations
- Grants to exchanges, depositories, and investor associations for awareness programmes
- Research on investor behaviour and market risks
Comparison with similar levies globally
Many securities regulators levy small fees on transactions to fund regulatory activities. The US SEC levies a “Section 31 fee” (currently approximately 0.000008% of transaction value) on exchange-registered securities transactions. The UK’s Financial Conduct Authority levies a transaction fee on regulated firms. The Indian IPFT levy at 0.0001 to 0.0005 percent is higher in percentage terms than the US Section 31 fee but lower than some European regulatory levies.
See also
- Zerodha brokerage structure overview
- SEBI turnover fee
- Exchange transaction charges
- STT and CTT on Zerodha
- GST on broking charges
- SEBI
- Zerodha
- National Stock Exchange
- Bombay Stock Exchange
References
- SEBI Act 1992, Section 11(a) – Investor Protection and Education Fund
- SEBI (Investor Protection and Education Fund) Regulations 2009 (as amended)
- SEBI Circular on IPFT levy – SEBI/HO/MRD/DRMNP/CIR/P/2018/107 (June 2018)
- SEBI Annual Report FY 2024-25 – IPFT utilisation and fund balance
- NSE Circular: IPFT levy rates for FY 2025-26
- Zerodha Charges page, support.zerodha.com/category/charges (accessed May 2026)