Contract Note in Indian Markets: The Full Charge Breakdown

What a Contract Note Actually Is

A contract note is the legal confirmation a SEBI registered stockbroker must issue to you for every trade executed on your behalf on a given trading day. It is not a marketing email or an app notification. It is a formal document, digitally signed by the broker, that records each buy and sell, the price, the time, the exchange, the settlement details and, most importantly, every single charge applied to that trade. Under SEBI and exchange rules, brokers must issue the contract note within 24 hours of the trade, which in practice means by the end of the trading day or early the next morning.

For an active Indian trader, the contract note is the one document that ties everything together. Your SEBI regulated broker may show you a clean profit figure inside the app, but that figure is before costs. The contract note shows you the truth after costs. It is the document a tax officer, an arbitration panel or your own chartered accountant will rely on, because it is the broker's formal, signed admission of exactly what was traded and exactly what was charged.

The reason this page exists is that most explanations of contract notes stop at names, quantities and brokerage. That is the least useful part. The part that decides whether your strategy is actually profitable is the charge stack. Below we open up that charge stack line by line, with real Indian rates and a fully worked Nifty options example, so you can read your own contract note like an auditor rather than a tourist.

The Full Charge Stack on Every Indian Trade

Every Indian contract note builds the net amount from a stack of charges sitting on top of the raw trade value. Reading these in order is the single most valuable skill the document teaches. The components are brokerage, Securities Transaction Tax (STT), exchange transaction charges, SEBI turnover fee, stamp duty, GST and, for delivery, depository (DP) charges. Each one has its own rate and its own rule about which side of the trade it applies to.

• Brokerage: the broker's own fee. Discount brokers typically charge a flat amount such as Rs 20 per executed order or 0.03 percent, whichever is lower, on intraday and F&O, and often zero on equity delivery. Full service brokers charge a percentage.
• STT (Securities Transaction Tax): a government tax on the trade value. The rate depends on the segment and on whether you are buying or selling. This is usually the largest non-brokerage charge.
• Exchange transaction charges: levied by NSE or BSE on turnover. Rates differ by segment, for example equity options charge on premium turnover, not notional.
• SEBI turnover fee: a tiny regulator fee, currently Rs 10 per crore of turnover (0.0001 percent).
• Stamp duty: a state level duty collected centrally since 2020 at uniform rates, charged only on the buy side.
• GST: 18 percent, charged not on the trade value but on the sum of brokerage plus exchange charges plus SEBI fee.
• DP charges: a flat depository charge (CDSL or NSDL plus broker) applied per scrip on the day you sell delivery shares, not on intraday or F&O.

STT, Stamp Duty and Exchange Fees by Segment

The biggest mistake traders make is assuming charges are the same everywhere. They are not. The table below shows the headline rates that appear on Indian contract notes across the main segments. These rates reflect the changes that took effect after the Union Budget 2024, including the higher options STT from 1 October 2024. Treat them as illustrative and always confirm the current figure on the NSE or SEBI site before you trade, because rates do change.

Two points trip people up. First, for equity options, both STT and exchange charges are levied on the premium value, not the contract notional. A Nifty 24000 call worth Rs 150 has a notional near 18 lakh per lot but a premium turnover of only Rs 11,250, and the charges follow the premium. Second, STT on options is charged only on the sell side and, for options that you exercise in the money, a separate higher STT applies on the settlement value, which is why exercised options can carry a nasty surprise charge.

Worked Example: One Lot of Nifty Call Options

Numbers below are illustrative and use round rates for clarity. They are not a promise of any return. Suppose on a weekly expiry you buy and then sell one lot of a Nifty 50 weekly call option. The Nifty lot size is 65. You buy at a premium of Rs 120 and sell the same day at Rs 160 as the index rallies. We will use a discount broker charging Rs 20 per executed order.

• Buy premium turnover: 65 units times Rs 120 equals Rs 7,800.
• Sell premium turnover: 65 units times Rs 160 equals Rs 10,400.
• Total premium turnover for charge purposes: Rs 18,200.
• Gross profit before costs: (160 minus 120) times 65 equals Rs 2,600.

Now the full charge breakdown exactly as it would appear, line by line, on your contract note. STT on options is 0.15 percent on the sell premium only, so 0.15 percent of Rs 12,000 equals Rs 18. Exchange transaction charge is roughly 0.03503 percent on total premium turnover of Rs 21,000, about Rs 7.36. SEBI fee is Rs 10 per crore on Rs 21,000, about Rs 0.02. Stamp duty is 0.003 percent on the buy premium of Rs 9,000, about Rs 0.27. Brokerage is Rs 20 per order for two orders, Rs 40. GST is 18 percent on brokerage plus exchange charge plus SEBI fee, that is 18 percent of (40 plus 7.36 plus 0.02), about Rs 8.53.

Notice the lesson hidden in the maths. On a clean Rs 3,000 winner, costs were only about Rs 74, or roughly 2.5 percent of profit, because the move was large relative to the premium. Now flip it. If you had scalped the same lot for just 8 points of profit, gross profit would be 8 times 75 equals Rs 600, while charges barely fall, because STT, exchange fees and GST scale with turnover, not with your profit. On small moves, the same Rs 60 to Rs 70 charge stack can eat 10 to 15 percent of your gross gain. That is why the contract note, not the app's profit number, is the honest scoreboard.

How a Delivery Equity Contract Note Differs

An equity delivery contract note looks different from an F&O one in three important ways, and recognising them stops you from misreading either. First, STT on delivery is 0.1 percent on both the buy and the sell, not just the sell, so it is effectively double what intraday traders are used to. Second, stamp duty on delivery is 0.015 percent on the buy, five times the F&O rate. Third, and unique to delivery, a DP charge appears on the day you sell, because shares are debited from your demat account through CDSL or NSDL.

Consider buying 100 shares of Reliance Industries at Rs 1,250 and later selling at Rs 1,300, an illustrative example. Buy value is Rs 1,25,000 and sell value is Rs 1,30,000. STT at 0.1 percent on both sides is Rs 125 on the buy and Rs 130 on the sell, Rs 255 in total. Stamp duty at 0.015 percent on the buy is about Rs 18.75. A typical DP charge on the sell is a flat figure near Rs 13 to Rs 20 plus GST. With many discount brokers charging zero brokerage on delivery, the dominant cost here is STT, which is exactly why delivery STT deserves its own line of attention on the note.

• Delivery STT applies to both legs, so holding and then selling is taxed on entry and exit.
• DP charge is a flat per scrip charge on the sell day, regardless of quantity, so selling 10 shares costs the same DP charge as selling 1,000.
• Zero brokerage does not mean zero cost. On delivery, STT and DP charges are the real expense, and they are clearly itemised on the contract note.

Reading Every Field on the Document

Beyond charges, a compliant Indian contract note carries identification and audit fields that matter when something goes wrong. The header carries the broker name, address, SEBI registration number and the exchange membership details. Your block carries your name, your unique client code (UCC) and your PAN. The trade block carries the order number, trade number, the exact execution time stamped by the exchange, the security or contract description, the quantity, and the executed price.

The settlement section tells you the settlement number, the settlement date and whether the trade was delivery based or intraday. For F&O it shows the expiry and the contract. These fields are not decoration. The exchange time stamp is what proves a trade was actually executed in the market and not at a manipulated price, and the trade number is what you quote if you ever raise a dispute on the exchange investor grievance platform. A note missing the SEBI registration number, the UCC or the time stamps is not a valid contract note.

• Broker identity: name, address, SEBI registration number, exchange membership code.
• Client identity: name, unique client code (UCC) and PAN.
• Trade detail: order number, trade number, exchange time stamp, contract or scrip, quantity, price.
• Settlement: settlement number, settlement date, delivery or intraday flag, expiry for derivatives.
• Charges: brokerage, STT, exchange charges, SEBI fee, stamp duty, GST, DP charge, and the net amount.

The Contract Note as Your Tax Record

At year end, the contract note set becomes the backbone of your tax filing, so the way you trade decides how it is taxed. Profits from equity delivery are capital gains. Short term capital gains, where you hold for 12 months or less, are taxed at 20 percent after the Budget 2024 change. Long term capital gains, held over 12 months, are taxed at 12.5 percent on the amount above the Rs 1.25 lakh annual exemption. The STT paid, which is right there on each contract note, is part of the cost that establishes these gains.

Profits from futures and options are not capital gains at all. F&O income is treated as non speculative business income and is taxed at your individual slab rate. This is a major distinction. It means F&O traders can set off losses differently, can claim expenses, and must compute turnover from their contract notes for audit thresholds. Intraday equity is treated as speculative business income, a third category again. In every case, the contract note is the primary evidence of turnover, realised profit and STT, which is why your chartered accountant will ask for the full set rather than a screenshot of your app.

Common Errors and How to Catch Them

Most contract note problems are caught in 60 seconds if you know where to look. Reconcile the net obligation printed on the note against the amount actually moved in your trading ledger for that day. If they do not match, something is off. Check that the STT side is correct for your segment, because a delivery trade wrongly flagged as intraday, or vice versa, produces a clearly wrong STT figure. Verify the GST line equals exactly 18 percent of brokerage plus exchange charges plus SEBI fee, since that is a fixed formula and any deviation signals an upstream error.

• Net amount on the note does not match your ledger debit or credit for the day.
• STT looks wrong because the trade is tagged delivery versus intraday incorrectly.
• An exercised in the money option carries a large unexpected STT on settlement value.
• Quantity or price differs from what your order confirmation showed, suggesting a partial fill not reconciled.
• A trade you never placed appears, which is the most serious flag and must be raised immediately.

If you find a genuine error, contact the broker in writing the same day and keep the thread. If the broker does not resolve it, the trade number and settlement number on the note are exactly what you submit to the exchange grievance mechanism or to SEBI SCORES. Because the contract note is a legally binding, signed document, it carries the evidentiary weight needed to win such a dispute, which is the whole point of the regulation that requires it.

Contract Note Versus Other Confirmations

Traders see several confirmations in a day and confuse them. An app push notification or an order status of complete is an execution confirmation, useful in the moment but carrying no charge detail and no legal standing. A trade confirmation from the exchange shows basic execution facts. Only the broker issued contract note carries the full charge stack, the settlement details, the signature and the legal status. When numbers disagree, the signed contract note wins.

For related ideas, see our trading glossary, including Market Order and Limit Order, both of which appear as order types on the very contract notes discussed here.

Sources and Further Reading

For authoritative rates and rules, refer to SEBI, NSE India, CBIC for GST and stamp duty, and the Income Tax Department. All figures here are illustrative. Always confirm current STT, exchange charges, stamp duty and tax rates on the official source before you trade, since these change with budgets and circulars.

Sources and Further Reading

For authoritative data and further reading on this topic, refer to SEBI (Securities and Exchange Board of India), NSE India, CBIC and Income Tax Department. Always confirm current rules, rates and contract specifications on the official source before you trade.