How does brokerage work in India?
Brokerage is the fee your broker charges for executing a trade. The Indian market has two pricing models — flat per order (discount brokers) and percentage of turnover (full-service brokers) — and the math is simple once you see it on a real trade. Here is how brokerage actually works, with worked examples.
The two brokerage models
Indian brokers price in one of two ways:
- Flat per order — typically ₹20 per executed order, regardless of trade size. Discount brokers (Zerodha, Groww, Upstox, Dhan, Angel One) use this.
- Percentage of turnover — typically 0.3 %–0.5 % of trade value, with no flat cap. Full-service brokers (ICICI Direct, HDFC Securities, Kotak Securities, Sharekhan, Motilal Oswal) use this.
How brokerage is calculated
Most discount brokers use the "lower of (flat, percentage)" formula. Example — ₹20 / 0.03 % means brokerage is the lower of ₹20 or 0.03 % of turnover. On a ₹50,000 trade, 0.03 % = ₹15, so brokerage = ₹15. On a ₹1,00,000 trade, 0.03 % = ₹30, so brokerage caps at ₹20.
Full-service brokers charge straight percentage with no cap. On a ₹1,00,000 trade at 0.5 %, brokerage = ₹500. The model penalises large trades, which is why discount brokers dominate active-trader volumes.
Per order vs per lot
Most brokers charge per executed order. Some charge per lot, particularly on options. Example: a 5-lot Nifty option trade at ₹20 per lot incurs ₹100 brokerage, vs ₹20 if priced per order. Per-lot pricing punishes multi-lot orders; per-order pricing helps them.
Brokerage is one part of total cost
On every Indian trade you pay five components: brokerage + STT + exchange transaction charges + SEBI fee + stamp duty + GST + DP charges (on sell delivery). For typical retail trades, statutory charges are often larger than brokerage. A ₹0-brokerage trade still has STT, exchange charges, GST and stamp duty.
Worked example — ₹1,00,000 delivery trade
Buy ₹1,00,000 of XYZ on a flat-₹20 discount broker, then sell at the same price (round trip):
- Brokerage on buy: ₹20.
- Brokerage on sell: ₹20.
- STT: 0.1 % × ₹1,00,000 × 2 = ₹200.
- Exchange charges + SEBI fee: ~₹7 (round-trip).
- Stamp duty (buy only): 0.015 % × ₹1,00,000 = ₹15.
- GST on (brokerage + exchange + SEBI): 18 % × (₹40 + ₹7) = ~₹8.46.
- DP charges on sell: ~₹15.50.
- Total: ~₹285. Of which ~₹40 is brokerage and ~₹245 is statutory + DP.
Frequently asked
What people ask about how does brokerage work in india?.
It is the fee for accessing the broker's order routing, execution infrastructure, app / terminal, customer support and the regulatory overhead of operating a SEBI-registered broking firm. Discount brokers run lean and price low; full-service brokers price higher because they include research, advisory and physical branches.
No. The brokerage number a broker advertises is exclusive of GST. GST at 18 % is added to brokerage plus a few other charges on the contract note. So a "₹20 flat" trade actually costs ~₹23.60 inclusive of GST.
Delivery brokerage was historically the highest-volume segment for discount brokers. Several brokers (Zerodha first, then Dhan, Fyers and others) moved to ₹0 delivery as a pricing weapon to attract long-term investors, with the trade-off that other segments (intraday, F&O) still carry brokerage and account-level charges (AMC) make up the revenue.
The brokerage calculator on each broker page on this site computes the brokerage and full landed cost for any trade size. After execution the contract note from the broker shows the actual line-item breakdown.