Securities and Exchange Board of India, SEBI, is the regulatory body for the securities market in India. It regulates and promotes the capital market, along with protecting the interest of investors by formulating timely guidelines and regulations. SEBI gives the platform to clearing members (custodians, banks, etc.), stockbrokers, sub-brokers, and portfolio managers, etc. to register to operate and it regulates their operations in the securities market.
For regulating the capital market, SEBI charges fees known as SEBI regulatory fees. These fees are paid to the regulator by the clearing members, stockbrokers, mutual funds, etc.
SEBI turnover charges or SEBI regulatory fees are the charges introduced in 2007 to meet the expenses that the regulator incurs to carry out its duties. These charges are applicable for transactions on all the registered stock exchanges of India on the basis of specific turnover.
SEBI turnover charges are initially collected by stock brokers from their clients. The collected amount is then remitted or deposited into the relevant stock exchanges in India, such as the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE). The stock exchange, in turn, transfers the charges to the regulator SEBI on a monthly basis. It is important to note the transparency, as these charges are explicitly stated in the contract notes sent to the client by the broker. In addition to brokerage charges, the contract note includes SEBI regulatory charges (SEBI turnover charges, securities transaction tax, stamp duty, and other charges). Sometimes, SEBI turnover charges are included in the other charges, along with transaction charges. Service tax is levied on all the charges included, except securities transaction tax.
In the case of mutual funds, these charges are included in the fund's expense ratio, which is charged to the investors.
Currently, SEBI charges 0.0001% of the turnover (INR 10 per Crore) on all the purchase and sale transactions in the securities other than the debt securities. SEBI also charges 0.000025% of the turnover (INR 2.5 per Crore) on all purchase and sale transactions in the debt securities.
SEBI Turnover Charges
|Nature of Securities||Charges applicable|
|All the purchase and sale transactions in the securities other than the debt securities||0.0001% of the turnover (INR 10 per crore)|
|All purchase and sale transactions in the debt securities||0.000025% of the turnover (INR 2.5 per crore)|
It is important to note that the charges applicable are based on the nature of securities and not based on the type of trade. Hence, the charges applicable are the same for both intraday, delivery trades, and future and options transactions. Let us take an example to understand the calculation of SEBI turnover charges.
Let us say you have purchased 10,000 shares at INR 20 at market hours today and you sell 4,000 shares at INR 25 during the market hour today (Intra-day trade) and sell 6,000 shares two days later at INR 30 (delivery trade). Here is how the SEBI turnover charges for these transactions are calculated.
Applicable charges: 0.0001% of (10,000 *INR 20) = 0.0001% of INR 2,00,000 = INR 0.20
Intra- day– Applicable charges: 0.0001% of (4,000 * INR 25) = 0.0001% of INR 1,00,000 = INR 0.10
Delivery – Applicable charges: 0.0001% of (6,000 * INR 30) = 0.0001% of INR 0.18
Hence, the total SEBI turnover charges applicable to the above transactions are:
INR 0.20 +INR 0.10 + INR 0.18 = INR 0.48
Apart from SEBI turnover charges, other regulatory fees include Securities Transaction Tax (STT) and stamp duty. Securities transaction tax and stamp duty applicable also vary depending on the nature of transactions and type of securities. You can utilise the brokerage calculators available online to calculate the brokerage charges, SEBI regulatory fees, and other applicable charges for the transactions.
It is extremely important for every investor to understand the charges applicable before starting to invest in capital markets to make an informed and rational investment decision. You must understand all the charges carefully so that you are completely aware of the same and do not get any surprises later!