Regulation SEBI True-to-Label Charges

SEBI True-to-Label charges October 2024

From WebNotes, a public knowledge base. Last updated 20 May 2026. Reading time ~5 min.

The True-to-Label charges framework effective from 1 October 2024 requires NSE, BSE, and other exchanges to charge participants based on actual notional turnover rather than discounted bundled rates. The framework eliminated volume-based exchange discounts that benefited high-volume brokers (and were typically passed on to retail clients only partially), aligning retail charges more accurately with the underlying cost.

What “True-to-Label” means

The label on a charge should match what the participant pays. Pre-October 2024:

Exchange transaction charges had tiered discounts based on broker volume.
High-volume brokers got lower per-trade exchange charges than low-volume brokers.
The discount was not always passed to the end client.

Post-October 2024:

Exchange transaction charges are flat per trade for all brokers.
The “label” (the rate disclosed) is what’s actually paid.
No hidden tiering or volume discounts.

For the retail client, this means the charge breakdown on the trade ledger reflects the actual cost paid to the exchange and the government.

Components affected

The True-to-Label change primarily affected:

Exchange transaction charge

The exchange’s per-trade fee. Previously varied by volume tier; now flat.

For F&O specifically:

NSE F&O exchange transaction charge: ~0.05% of premium for options (varies slightly between contract types).
BSE F&O: similar.

Stamp duty (state-level)

Stamp duty rates per state are not affected by True-to-Label (these are state charges, not exchange).

SEBI charge

The SEBI transaction fee (a small per-trade charge funding SEBI operations) was clarified to be uniform.

GST

GST is computed on brokerage + exchange transaction charge. The True-to-Label change clarified the underlying base for GST computation.

Impact on high-volume retail traders

A high-volume retail F&O trader pre-October:

Paid the discounted broker-level exchange rate.
The broker may or may not have passed the discount to the client.

Post-October:

All clients pay the same exchange rate.
For high-volume clients at a discount-broker that was already passing the discount, the rate increased slightly.
For clients at brokers that retained the discount, the change made the disparity transparent.

For Zerodha clients: Zerodha’s flat-fee model meant the exchange-charge tiering was already largely irrelevant to the broker’s revenue. The change had limited impact on Zerodha’s pricing.

Impact on broker-side economics

Some brokers used the volume-tiered discounts as a major revenue stream:

High-volume institutional and broker clients took advantage of tiering.
Brokers retained part of the discount as additional margin.

The True-to-Label change eliminated this revenue stream, with knock-on effects on:

Broker price-cutting potential.
Cross-subsidy of retail trades using institutional volume.

Effect on retail charges

For a Rs 50 lakh / month F&O turnover retail trader:

Pre-October: Exchange charge ~Rs 2,500 (at a discounted rate).
Post-October: Exchange charge ~Rs 3,000 (at flat True-to-Label rate).
Annual increase: ~Rs 6,000.

Combined with the STT hike , the total charge increase for active F&O retail traders post-October 2024 was meaningful: roughly Rs 10,000-30,000 per year for a moderately active trader, more for high-volume traders.

Together with STT hike

The True-to-Label change and the STT hike both took effect on 1 October 2024. Together they raised the total transaction cost of F&O speculation significantly:

Component	Pre-October	Post-October	Change
STT (option premium sell)	0.0625%	0.1%	+60%
Exchange charge	Discounted (tiered)	Flat True-to-Label	Net higher
Total per-trade hurdle	Lower	Higher	Significant

The combined effect was approximately 25-40% higher F&O transaction cost for active retail traders.

Why SEBI introduced True-to-Label

Transparency

The framework forces clarity about what each participant pays, eliminating hidden cross-subsidies and undisclosed pricing.

Fair competition

Brokers can no longer compete on extracting discounted exchange rates and partially passing them to clients. Competition shifts to actual brokerage and service quality.

Retail benefit (indirect)

A retail client now knows exactly what they pay to whom. Previously, the breakdown was often opaque.

Implementation challenges

Exchanges had to update their billing systems to the True-to-Label model. Brokers had to update their charge ledgers and client communications. The transition was largely smooth with industry-wide compliance by Q4 2024.

Practical implications

For retail F&O traders:

Recalculate the cost basis of your strategy under the new rates.
For low-frequency strategies (delivery, swing), the impact is small.
For high-frequency strategies (intraday options scalping, weekly straddle / strangle), the impact can be material.
Use Zerodha brokerage calculator with updated rates.

External references

References

SEBI, True-to-Label charges framework, circular dated 1 July 2024 effective 1 October 2024.
NSE India, Revised exchange transaction charges, nseindia.com.
BSE India, Revised F&O charges, bseindia.com.
Zerodha policy commentary, True-to-Label and Zerodha pricing, zerodha.com.

Reviewed and published by

WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

Last reviewed: 20 May 2026
Conflicts of interest: WebNotes is independent. No relationship with any broker, registrar or bank named in this article.