Indian Stock Exchanges Revise Transaction Fees and TDS Rates [Details Here]

The Indian stock exchanges, specifically the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), have announced a significant revision in their transaction fees for cash and futures and options trading. This change, which came into effect on October 1, 2024, is part of a broader set of fiscal measures introduced by the government in the Union Budget. The new transaction fee for the cash market on the NSE is now Rs 2.97 per lakh of traded value. For equity futures, the fee has been set at Rs 1.73 per lakh of traded value.

The fee for equity options will be Rs 35.03 per lakh of premium value. In the currency derivatives segment, futures will incur a fee of Rs 0.35 per lakh of traded value. Options, which include interest rate options, will have a fee of Rs 31.10 per lakh of premium value. These changes reflect a broader shift in the Indian stock market as the NSE and BSE update their transaction fee structures. This shift follows a directive from the Securities and Exchange Board of India (SEBI), which mandated a uniform flat fee structure for all members of market infrastructure institutions.

This uniform fee structure aims to eliminate disparities that existed under the previous slab-wise system, which often favored larger players with higher trading volumes. In addition to the revised transaction fees, the government has also announced changes to the Tax Deducted at Source (TDS) rates. From October 1, 2024, a 10 per cent TDS rate applies to certain Central and state government bonds, including floating rate bonds, with a threshold limit of Rs 10,000 above which the tax is deducted.

This change is expected to impact investors who hold these bonds. Furthermore, the TDS on rent payment by Hindu Undivided Families (HUF) or certain individuals has been reduced to 2 per cent from the previous rate of 5 per cent. This reduction is expected to provide some relief to these taxpayers. Similarly, under Section 194G, the commission on the sale of lottery tickets has been lowered to 2 per cent from 5 per cent.

In the Union Budget, the government had announced an increase in the securities transaction tax (STT) on Futures and Options of securities to 0.02 per cent and 0.1 per cent, respectively. This increase is expected to impact traders who deal in these financial instruments. Zerodha, India's largest brokerage firm, has announced that there will be no changes to its equity delivery charges, continuing to offer this service free of cost.

However, starting October 1, 2024, notable adjustments will be implemented in the charges for options and futures trading. For options trading, the Securities Transaction Tax (STT) has increased from 0.0625% to 0.1%. Simultaneously, the transaction charge has decreased from 0.0495% to 0.035%. Zerodha CEO Nithin Kamath highlighted this adjustment, stating, Currently, we are not making any changes to our brokerage. For options, the STT has increased to 0.1% from 0.0625%, while the transaction charge has decreased to 0.035% from 0.0495%.

The changes in the transaction fees and TDS rates are part of a broader set of fiscal measures introduced by the government in the Union Budget. These measures are expected to impact traders, investors, and taxpayers across the country. As the Indian financial market continues to evolve, these changes reflect the government's commitment to ensuring a fair and transparent trading environment. The impact of these changes will be closely watched by market participants and analysts in the coming months.