AT A GLANCE
- A contract note is the broker-issued trade record; SEBI investor guidance says investors should insist on a valid contract note or confirmation memo for trades and keep it for their records.
- Brokerage is only one component of total trading cost. Statutory and regulatory levies can apply even where the broker advertises zero brokerage for a product.
- The contract note should let you reconcile order/trade details, transaction price, brokerage and relevant levies rather than relying only on the app’s P&L screen.
- For equity delivery, current NSE investor material shows STT at 0.10% on both purchase and sale and stamp duty at 0.015% on the buyer; other rates differ by transaction type and can change.
- The safest habit is to compare the contract note, broker ledger, bank movement and demat statement as separate but connected records.
Last reviewed: 16 September 2026
A trade is not complete, from an investor-record perspective, just because an app flashes “executed”. The formal record that tells you what was bought or sold, at what price, in what quantity and with which charges is the contract note issued by the broker. It is one of the most useful documents for reconciling what you thought happened with what was actually booked.
The other common source of confusion is cost. “Zero brokerage” does not mean “zero transaction cost”. A listed-equity trade can involve brokerage, exchange and clearing-related charges, SEBI turnover fees, Securities Transaction Tax (STT), stamp duty, GST on taxable services and, on some demat debits, a depository-participant charge. The exact mix depends on the product, side of the trade and intermediary tariff.
What exactly is a contract note?
A contract note is the broker’s formal record of transactions executed for the client. SEBI’s stock-broker framework requires brokers to issue contract notes in the prescribed form and SEBI investor material asks investors to insist on the document for trades done through the securities market.
It is useful to think of the contract note as an invoice plus an execution record. It identifies the trade and also separates price from brokerage and charges so that the investor can audit the economic result.
What should you expect to see on it?
| Field | Why it matters |
|---|---|
| Client / UCC and broker details | Confirms whose account and which registered intermediary executed the trade. |
| Order and trade number/time | Lets you trace the path from order placement to exchange execution. |
| Security, quantity and buy/sell side | Confirms the instrument and size actually booked. |
| Trade price / rate | Shows the execution price used for the transaction. |
| Brokerage | Shows the broker’s commercial charge separately from the trade price. |
| Statutory / regulatory levies | Allows reconciliation of STT, GST, stamp duty, SEBI/exchange/clearing charges as applicable. |
| Settlement information | Links the trade to the applicable settlement cycle and obligations. |
| Net amount payable / receivable | Summarises what the client owes or is due after the transaction and charges. |
Brokerage is not the same as total transaction cost
Brokerage is the fee agreed with the stock broker, subject to applicable exchange/regulatory limits. Total transaction cost is broader. A broker can advertise low or zero brokerage on a product while statutory and infrastructure-related levies still apply.
SEBI’s 2024 stock-broker FAQ says brokers must provide a tariff sheet at onboarding setting out the charges that can be levied. That tariff sheet is a better document to compare across intermediaries than a headline advertisement.
| Cost component | Who/what it relates to | Beginner interpretation |
|---|---|---|
| Brokerage | Broker service | Commercial fee under the broker tariff. May be flat, percentage-based or zero for selected products. |
| Exchange / clearing transaction charges | Market infrastructure | Charges connected with trading/clearing infrastructure; exact rates depend on segment and venue. |
| SEBI turnover fee | Market regulation | A small regulatory levy collected on eligible transactions. |
| STT | Central tax on specified securities transactions | Depends on product and whether it is buy/sell/delivery/non-delivery. |
| Stamp duty | Transaction documentation levy | Generally collected on the buyer for exchange-traded securities at prescribed rates. |
| GST | Tax on taxable services/charges | Typically applies to brokerage and specified service/transaction charges, not to the security value itself. |
| DP / demat debit charge | Depository participant service | May arise when securities are debited from demat; often shown outside the trade contract note depending on broker/DP arrangement. |
A current equity-delivery example – why “zero brokerage” can still cost money
Suppose an investor buys listed equity worth Rs 1,00,000 on a delivery basis. If the brokerage on that product is zero, the purchase can still attract statutory charges. Current NSE investor material lists STT of 0.10% on delivery purchase and stamp duty of 0.015% on the buyer. Those two items alone would be Rs 100 and Rs 15 on a Rs 1,00,000 illustrative purchase, before considering exchange/clearing charges, SEBI fee and GST on taxable charges.
A later sale can have a different cost mix. For example, delivery-sale STT is also shown at 0.10% in the current NSE table, while stamp duty is a buyer-side levy for the ordinary delivery purchase. A demat debit/DP charge may also apply on the sale depending on the DP tariff. The objective here is not to calculate your invoice but to show why the headline brokerage is not the whole cost.
How to audit a contract note in five minutes
- Confirm the broker name, your client/UCC details and the trade date.
- Match the security, side, quantity and price with your order/trade book.
- Check that brokerage is shown separately and agrees with the tariff you accepted.
- Review each levy instead of treating “other charges” as a black box. If something is unclear, ask for the basis and rate.
- Reconcile the net obligation with your broker ledger, bank movement and, after settlement, your demat statement.
Contract note versus broker ledger versus demat statement
| Record | Main question it answers |
|---|---|
| Contract note | What exactly was executed and what charges were attached to the trade? |
| Broker ledger / funds statement | How did cash obligations, credits, debits and broker charges move through my broking relationship? |
| Bank statement | What money actually moved through the banking system? |
| Demat statement | What securities were credited, debited, pledged or otherwise recorded in the depository system? |
Common mistakes and red flags
- Looking only at the app’s “average price” and never saving the formal contract note.
- Comparing brokers only on advertised brokerage while ignoring DP charges, platform fees and statutory levies.
- Accepting charges that were not disclosed in the tariff sheet or that cannot be reconciled to the contract note/ledger.
- Ignoring tiny discrepancies because the trade is profitable; reconciliation is a process-control habit, not a profit-and-loss habit.
- Sending money or securities through unofficial channels rather than the registered intermediary’s approved process.
- Assuming every charge is the broker’s income. Several important line items are taxes or market-infrastructure levies.
A Tradient cost-control checklist before you trade
- Read the broker tariff sheet and DP tariff before account use, not after the first surprise debit.
- Know whether brokerage is percentage-based, flat or zero for the product you use.
- For active strategies, estimate round-trip friction before entering; small expected edges can be consumed by cost and slippage.
- Save contract notes and periodic statements in a folder that is independent of the broker app.
- Recheck current tax/levy rates whenever regulation changes; do not rely on an old screenshot or social-media calculator.
Key Takeaways
- The contract note is the primary trade-level document for checking execution details and charges.
- Brokerage is only one cost component; “zero brokerage” does not mean a trade has no statutory or infrastructure cost.
- Current 2026 NSE investor material lists 0.10% STT on both sides of delivery-equity trades and 0.015% stamp duty on the buyer, but rates vary by product and can change.
- DP/demat debit charges are separate from brokerage and may be billed under the DP relationship.
- A good investor reconciles contract note, ledger, bank and demat records rather than trusting one screen.
FAQs
When should I receive a contract note?
SEBI investor guidance says investors should insist on a valid contract note or confirmation memo for trades done within 24 hours of the transaction. Broker procedures may deliver an electronic contract note much sooner.
Is zero brokerage really free trading?
No. Zero brokerage refers only to the broker’s brokerage component for the stated product. Statutory levies, exchange/clearing charges, GST on taxable services and possible DP charges can still apply.
Why does my contract note cost differ from my app estimate?
The final note may include actual executed quantities/prices and applicable levies. Partial fills, multiple executions and product-specific charges can also change the result. Reconcile line by line.
Can a broker charge anything it wants?
No. Charges are governed by the accepted tariff, exchange/regulatory rules and applicable law. SEBI material requires tariff disclosure and distinguishes brokerage from statutory/regulatory levies.
Should I use old tax-rate tables from the internet?
Avoid it. Tax and levy rates can change. Use current exchange, SEBI and government sources and the actual contract note for your transaction.
This article is for educational purposes only and is not investment advice or a recommendation to buy or sell any security.
Sources and further reading
- SEBI Investor – Do’s and Don’ts of Investing in Securities Market – https://investor.sebi.gov.in/securities-dos_and_donts.html
- SEBI – Stock Broker FAQs (updated Sep 2024), including brokerage/tariff guidance – https://www.sebi.gov.in/sebi_data/faqfiles/sep-2024/1727418208774.pdf
- NSE – SEBI Turnover Fees, STT and Other Levies (updated 17 Apr 2026) – https://www.nseindia.com/static/invest/first-time-investor-sebi-turnover-fees-stt-other-levies
- NSE – Basic FAQs on Secondary Market – https://nsearchives.nseindia.com/web/sites/default/files/2023-02/Basic%20FAQs%20on%20Secondary%20Market.pdf
- SEBI – Contract notes and brokerage – https://www.sebi.gov.in/legal/circulars/feb-1991/contract-notes-and-brokerage_19281.html