A calculator for brokerage is a common resource used to determine multiple aspects of trading. These aspects include turnover, brokerage, STT total, total tax charge, GST, SEBI charges, and the points required to break even. There are many calculators which offer additional features as well.
In this article, we will deal with only the above-mentioned factors. They are all critical for calculating the net profit.
Turnover:
This is a term which is very commonly used in many places. It is often not clearly understood. Turnover, essentially, is the measure of how efficiently and swiftly a company moves its assets or increases them. When it comes to investment, it is the part of a portfolio in a certain time frame. For a broker, a quick turnover rate is favourable as this will also warrant an increase in the commission per trade.
On the brokerage calculator, turnover is obtained by dividing the credit sales by the average of the money owed to the entity from external bodies.
Brokerage:
As the link between the buyers and sellers, brokerage companies demand a small fee for organizing and aiding the transaction. This is known as a commission. It is the duty of the brokerage company or firm to make sure that everything runs smoothly without any glitches. A brokerage might also charge an extra fee for certain products or services.
There are different types of brokerages like discount brokerage, online brokerage, independent brokerage, and captive brokerage. A proper understanding of each of these types is necessary. The overall brokerage fee is calculate using the calculator.
Security Transaction Tax (STT):
This is a tax that is only applicable for on-market transactions. It does not apply to commodities or currency. It is applicable to a large majority of financial elements like bonds, shares, and derivatives.
It is calculated as follows:
- 05% tax for selling an option in securities.
- 125% for the same if the option is emphasized
- 01% for the sake if futures in security
Goods and Services Tax (GST):
This is one of the most common form of taxation. Goods and Services Tax (GST) is a unified tax structure that brings in good revenue for the government. These mainly include goods served for domestic consumption. It is very similar to the previously popular ‘VAT’.
GST effectively avoids the need for double taxation. This means that, previously, each of the taxes stacked up on each other, causing a lot of chaos.
Security and Exchange Board of India (SEBI):
It is the main player in the securities market today. The SEBI ACT, 1992, completely handed over statutory powers. First established in 1968, the organization quickly grew into a massive force under the Prime Minister’s thumb.
These are some of the main features that are available in almost every calculator application. To analyse and use the statistics, and come to an effective conclusion is completely up to the reader. This can serve as a simple guide to starting off with stock exchange and similar endeavours.