Brokerage Charges Explained


A brokerage charge is a fee or commission that a broker charges for performing transactions on behalf of a client or providing specialized services to them. As a broker, you can charge a brokerage fee for services such as transactions such as purchases and sales, consultations, negotiations, and delivery. Various industries charge brokerage fees, including financial services, insurance, real estate, and delivery services.

Understanding the Brokerage Charges

As the name implies, brokerage charges, also known as broker fees, are based on a percentage of the transaction as a flat fee or as a hybrid fee. There are various types of brokerage charges for different brokers and different industries.

Brokerage charges in the real estate industry are typically charged to the buyer, the seller, or both, the buyer and seller as a flat fee or standard percentage. They charge between 1% and 2% of the loan amount as fees. Mortgage brokers assist potential borrowers in locating and securing mortgage loans.

The insurance industry witnesses brokers being aligned toward customers instead of insurers. Brokers assist clients in finding the most appropriate insurance policies for which they charge their clients a fee as a result of their services. Rarely, insurance brokers may be paid charges both by the insurance company and the individual who purchases the insurance policy.

In the financial securities industry, a brokerage fee is charged to facilitate trading or administer investments or other accounts. The three main types of brokers that charge brokerage charges are full-service brokers, discount brokers, and online brokers.

How are Brokerage Charges Calculated for Trading?

Brokerage is calculated by taking a percentage of each purchase or sale of shares, regardless of whether the shares are bought or sold. Here, you are charged for intraday trading as well as delivery. You need to understand both concepts:

  • Intraday trading: The intraday trading strategy is used by traders who buy and sell shares within the same trading day
  • Delivery:  When you decide to hold your stocks, these are the charges you will have to pay.

What are the Brokerage Charges subjected to?

Brokerage charges in India are subjected to vary from broker to broker and are not uniform from one to the other. In addition, the type of transactions you make may also influence the brokerage charges. Some brokers offer dynamic brokerage slabs for their clients, which means that regular clients enjoy a reduced brokerage rate.

While you are trading and investing, it is better to open a brokerage account to keep track of how much brokerage you have paid over a certain period. This will help you to track how much brokerage you have paid. If the brokerage is too high, it can eat up some part of the profit that you have earned while trading on investments.

Your investment returns can be severely impacted by brokerage charges and therefore, choosing the right one can help. When it comes to expense ratios, brokerage commissions, stock trading commissions, and advisor fees, it is important to understand what you are paying.

Whether they are baked into the fund you’ve chosen, charged to your investment account, or added on as stock trading commissions, you need to know what you’re paying.


Brokers calculate their brokerage charges based on a percentage of the trading volume of the company. When it comes to trading in stock markets, it is important to select a reliable financial service provider that can offer you features such as free online Demat Account and trading account.

There is always the possibility of getting some kind of benefits, such as a brokerage rebate or a discount on the AMCs on your online Demat account. There are different types of equity brokerage plans available to you, such as Variable Brokerage Plans (VBP) and Value Added Subscription Plans (VAS). You should always ensure you choose a financial partner that offers such plans.