What is the lowest brokerage charge in India? A detailed study

When it comes to the lowest brokerage charges in India, the thought of discount brokers come up. After that, the only question that remains is which broker can offer the lowest charges? But before starting to compare different brokers, it is important to know what does the broking charges include.

The ‘lowest brokerage charges’ is a broad term and it includes the following:

Actual brokerage charges

Account opening charges

Annual maintenance charges

Fund transfer charges

Research and other service charges

Additional hidden charges

What are the types of lowest brokerage charges mentioned by brokers?

There are different types of low brokerage charges and they are as follows:

The Type A broker will ask for an account opening charge of Rs. 200 in addition to an annual maintenance charge (AMC) of Rs. 300. However, the brokerage rate will be as low as 0.01% or Rs. 20, which one is lower.

There is another type of broker that will ask for almost the same amount of money for opening an account. But the AMC will be much higher.

The third type of broker seeks an account opening charge along with an AMC, but the cost per lot is much less at Rs. 9/lot. The collection of all these costs will determine the break-even point of the Nifty trade while trading in the future.

The fourth type of broker will not charge any account opening cost or AMC. The brokerage charge for all segments of the National Stock Exchange in India is Nil.

Thus, the question is, how do the brokers make money? There is a difference between full-service brokers and discount brokers.

Unlike the full-service brokers, the discount brokers will not let any position to be taken before funding. The discount brokerage clients are spread throughout different small & medium businesses. This is why there is always float available with the broker and they can earn more than average returns on products like liquid funds.

Are there any hidden costs on the lowest brokerage charges?

Yes, the discount brokers add hidden costs from traders. They are as follows:

Firstly, there is a back-up call-and-trade facility that requires a cost when the internet is down.

Secondly, the brokers charge for all the documents requested by the trader.

Thirdly, they charge for the fund transfers. They don't charge for the NEFT and RTGS fund but they charge for transfers through payment gateways.

Finally, most of the discount brokers will also charge if the trader doesn't close out the intraday position by 3 PM and the trading system closes it.

All these are the hidden charges within the lowest brokerage costs that add up quite a lot of money.

What are the facts to remember for low-cost discount brokerage?

Broking cost is not only about brokerage, but it also includes other costs like account opening and AMC. Calculate the cost of a discount broker after adding all these charges. And then calculate then break-even level for Nifty trade.

Consider service delivery and technology stability. This is a 100% online platform where tech-support matters a lot.

The broker needs to offer a backup facility like call-and-trade. It should be foolproof and also doesn't charge a lot.

Discount brokers are best if you are capable enough to trade on your own. If you need support then it is better to choose a full-service broker.

There is nothing called "free" brokerage. A brokerage that is not charging anything is still getting the benefit of the float. It will add up to quite a lot of money when the client base expands.

Be careful of the hidden charges and read the details thoroughly. Most of the time, the twist remains in the detail.

The lowest brokerage charges in India will vary according to the status of the broker and the services they offer. On average, the full-service broking house will ask for charges between 0.03% to 0.60%. If it is a discount broker, it will ask for a flat fee on intraday trading. Or they might also offer a lifetime of free delivery of stocks to a trading account.

Choosing a discount broker in India needs research. The best trading platform in India will incorporate all the financial securities, stocks, bonds, mutual funds betwee