Delivery Trading (CNC) in Indian Markets: T+1 Settlement, Charges and Tax

What delivery trading actually means

Delivery trading is the simplest form of equity investing on the NSE and BSE. You buy shares by paying their full value in cash, the shares are credited to your demat account, and they stay there until you choose to sell. There is no expiry, no rollover, and no broker breathing down your neck to close the position by 3:20 pm. On Zerodha, Upstox, Angel One, Groww and most other brokers, you select this as the CNC product type, which stands for Cash and Carry. The contrast is MIS (intraday) and NRML (carry-forward derivatives), both of which use leverage and have square-off rules.

Because you are paying full value, delivery is the only equity product where you become a genuine part-owner of the company. You appear on the shareholder register on the record date, which means you receive dividends, bonus shares, rights issues and voting rights. None of these benefits flow to an intraday trader who never takes delivery. This is why long-term investors, SIP-style buyers and swing traders who hold for days or weeks all use CNC rather than intraday.

A common misconception is that delivery means you must hold for a year. That is not true. Once shares are in your demat, you can sell them the very next day or hold them for a decade. The 12-month boundary only matters for tax classification, not for whether you are allowed to sell. The word delivery simply refers to the shares being delivered into your account, as opposed to being netted off intraday.

T+1 settlement: what changed and why it matters

For years, Indian cash-market trades settled on a T+2 cycle, meaning the money and shares exchanged hands two working days after the trade. That is now outdated. SEBI moved the entire equity market to T+1 settlement in phases, completing the rollout on 27 January 2023. India was the first major market in the world to fully adopt T+1 for all listed stocks. So when you buy a stock today, the shares are credited to your demat by the evening of the next working day, and when you sell, the sale proceeds are available faster too.

SEBI did not stop there. From 28 March 2024 it launched an optional T+0 (same-day) settlement cycle running in parallel with T+1, starting with a beta set of 25 stocks and then expanding the eligible list. Under T+0, a trade done before the cut-off settles on the same day, so a seller can get funds and a buyer can get shares within hours. T+0 is optional and broker- and stock-specific, while T+1 remains the default for everything. If you read a guide that still says delivery settles in T+2, treat the rest of that guide with caution, because it has not been updated since early 2023.

Delivery (CNC) vs intraday (MIS) vs F&O

Choosing the right product type is the single most common beginner mistake. Buying in MIS by accident means your broker will auto square-off your position before market close even if you wanted to hold, and you may book an unwanted loss. The table below sums up the practical differences.

Note the tax line carefully. Only delivery is taxed as capital gains. Intraday equity is speculative business income and leveraged F&O is non-speculative business income, both taxed at your income-tax slab and reported very differently. Mixing these up is a frequent cause of trouble at filing time.

A fully worked CNC example: 50 shares of Reliance

Numbers below are illustrative and use realistic but rounded levels. They are not a recommendation or a promise of any return. Suppose on a given morning you buy 50 shares of Reliance Industries at Rs 2,950 each using the CNC product. The raw turnover on the buy is 50 multiplied by 2,950, which is Rs 1,47,500. Because this is delivery, you need the full Rs 1,47,500 in your funds, no leverage is offered.

Here is the charge breakdown on the buy leg, using typical NSE delivery rates. Most discount brokers charge zero brokerage on delivery, so brokerage is Rs 0. STT on delivery is 0.1 percent of turnover on both buy and sell.

So your effective cost to acquire the position is about Rs 1,47,675. Now assume you hold for 14 months and Reliance rises to Rs 3,300. You sell all 50 shares, giving a sell turnover of 50 multiplied by 3,300, which is Rs 1,65,000.

• Sell-side STT at 0.1 percent of Rs 1,65,000 is Rs 165.00.
• Sell-side NSE transaction charge, SEBI fee and GST add roughly Rs 5.40 more. Note there is no stamp duty on the sell leg.
• Total sell-side charges are about Rs 170.40.

Gross gain is sell turnover minus buy turnover, that is Rs 1,65,000 minus Rs 1,47,500, which equals Rs 17,500. Subtract total charges of roughly Rs 174.98 plus Rs 170.40, about Rs 345, and your pre-tax net gain is about Rs 17,155. Because you held for 14 months, this is a long-term capital gain. LTCG is exempt up to Rs 1.25 lakh in the financial year, so if this is your only equity gain, the entire Rs 17,155 falls within the exemption and your tax is effectively zero. Your net take-home stays around Rs 17,155.

How taxation really works on delivery gains

Delivery profits are capital gains, not business income. The holding period decides the rate. If you hold listed shares for 12 months or less, the gain is short-term and taxed at a flat 20 percent under Section 111A for transactions where STT is paid. If you hold for more than 12 months, the gain is long-term and taxed at 12.5 percent under Section 112A, but only on the portion of your aggregate LTCG that exceeds Rs 1.25 lakh in a financial year. The first Rs 1.25 lakh of LTCG each year is tax-free.

These rates reflect the changes made in the July 2024 Union Budget, which raised STCG from 15 to 20 percent, raised LTCG from 10 to 12.5 percent, and lifted the LTCG exemption from Rs 1 lakh to Rs 1.25 lakh. Health and education cess of 4 percent applies on the tax, and a surcharge may apply at higher income levels. Crucially, you cannot claim the old indexation benefit on listed equity LTCG, since these special rates already apply.

• STCG on delivery: 20 percent flat (Section 111A), holding 12 months or less.
• LTCG on delivery: 12.5 percent (Section 112A) on gains above Rs 1.25 lakh per year, holding over 12 months.
• STT paid on the trade is a precondition for these concessional rates.
• Capital losses can be set off and carried forward for 8 years if you file your return on time.
• This is completely separate from F&O, which is taxed as business income at slab rates.

Margin, funds and the peak-margin rule

Delivery means no leverage from the broker on the buy side. You must have the full trade value in your account at the time of order, which is why the Reliance example needed the entire Rs 1,47,500. SEBI tightened margin rules with the peak-margin framework, so brokers can no longer hand out the loose intraday-style margins they once did, and upfront margin collection is now strictly enforced on the trading account.

Some brokers offer a separate MTF (Margin Trading Facility) product that lets you buy delivery stocks by paying part of the value and funding the rest as an interest-bearing loan. This is a regulated, SEBI-approved facility, but it is not plain delivery, it carries daily interest and pledge requirements, and it is riskier. Pure CNC delivery, by contrast, has zero interest cost because you are using your own cash.

Dividends, corporate actions and ownership perks

Holding shares in delivery makes you a registered shareholder, so you collect every benefit the company distributes. Dividends are credited directly to your bank account if you hold the shares on the record date. You also receive bonus shares, the right to subscribe to rights issues, and voting rights at the AGM. Under the T+1 cycle, the relevant ex-date and record-date timing is one day tighter than in the old T+2 era, so to be eligible you generally need to be holding by the ex-date.

Dividends in the hands of investors are now taxable at your slab rate since the dividend distribution tax regime was abolished in 2020. If total dividends in a year exceed Rs 5,000 from a single company, TDS at 10 percent is deducted, which you can adjust against your final tax. For long-term delivery investors, dividends plus capital appreciation together form the total return, which is why dividend-paying blue chips are popular in delivery portfolios.

Who delivery trading suits, and who it does not

Delivery is the right tool when your view plays out over days, weeks, months or years, not minutes. It suits long-term investors building a portfolio, swing traders holding for a few sessions, and anyone who wants to avoid the stress and forced square-off of intraday. Because there is no leverage, a delivery position cannot blow up your account through a margin call, the worst case is the stock falling and you choosing when to exit.

• Good fit: long-term investors, dividend seekers, swing traders, SIP-style accumulators.
• Good fit: anyone who wants ownership benefits like dividends, bonuses and voting.
• Poor fit: scalpers and day traders who never hold overnight, since they pay double-side STT for no reason.
• Poor fit: those chasing leverage, who should understand the higher risk of MIS or F&O before using it.

It is worth tracking every delivery trade in a structured way, including entry, exit, charges and the reason for the trade, so you can review what worked. A simple trading journal turns scattered trades into a feedback loop you can actually learn from, which matters more for long-term delivery investing than any single hot tip.

Common mistakes that quietly cost money

Most delivery losses are self-inflicted and avoidable. The errors below show up again and again in real trading accounts, and none of them require advanced knowledge to fix, just discipline and one or two extra seconds of attention before you click buy.

• Placing the order in MIS instead of CNC and getting auto squared-off the same day.
• Selling on the same day you buy in CNC, which becomes BTST and can hit short-delivery auction penalties if the counterparty defaults.
• Ignoring charges on small trades, where STT, stamp duty and GST can eat a meaningful slice of a tiny gain.
• Confusing the 12-month tax line, and selling at 11 months when waiting a few weeks would convert STCG at 20 percent into largely tax-free LTCG.
• Not diversifying, and putting the whole account into one stock with no margin of safety.

Regulatory framework: SEBI, exchanges and depositories

Delivery trading runs inside a tightly regulated system. SEBI sets the rules, the NSE and BSE run the order matching, the clearing corporations (NSE Clearing and Indian Clearing Corporation) guarantee settlement, and the two depositories NSDL and CDSL hold your shares electronically in demat form. This layered structure is what makes T+1 settlement possible and protects you from counterparty default in normal conditions.

SEBI has steadily made the system safer for retail investors, including the move to T+1 in 2023, optional T+0 from 2024, mandatory upfront margin collection, the ASBA-like blocking of funds for secondary-market trades being piloted, and stricter rules on how brokers handle client funds and securities. As an investor you should still confirm current rates, settlement timelines and stock-specific T+0 eligibility on the official source before relying on them, since these rules evolve.

Sources and further reading

For authoritative data and current rules, refer to NSE India, SEBI, the Income Tax Department and Zerodha Varsity. Always confirm current STT rates, settlement cycles, T+0 stock lists and tax slabs on the official source before you trade, because these change from time to time.

Sources and Further Reading

For authoritative data and further reading on this topic, refer to NSE India, SEBI Investor Education, Income Tax Department and Zerodha Varsity. Always confirm current rules, rates and contract specifications on the official source before you trade.