How to actually place a trade, what it costs you in full, and how the government taxes your gains. The numbers most investors ignore until they hurt.
TK
Tanmay Kurtkoti
Founder & CEO, RupeeCase · QC Alpha
⏱ 14 min read⟳ Updated 6 May 2026◆ Beginner
Here’s something most investing education skips entirely: every trade you make has a real cost. Not just brokerage, there’s STT, exchange charges, SEBI turnover fees, GST, and stamp duty all stacking up simultaneously. And when you exit with a profit, tax stacks on top of that.
For a buy-and-hold investor who trades once a year, these costs are minor. But for a systematic strategy that rebalances quarterly or monthly, transaction costs can quietly eat 2 to 4% of your returns annually if you’re not careful. This is precisely why RupeeCase includes cost modelling in every backtest, a strategy that looks great before costs might look very different after.
This module covers everything: order types, the full cost breakdown, Indian capital gains taxation updated for Budget 2024, and tax loss harvesting. By the end you’ll have a complete picture of what it actually costs to invest in Indian equity markets.
Order types, how you actually buy and sell
When you tap “Buy” in a broker app, you’re placing an order. Which type you use matters, especially when markets are moving fast or the stock has thin liquidity.
Market Order
Executes immediately
Buy or sell at whatever the best available price is right now. Guaranteed execution, no price control. In liquid stocks like RILReliance or HDFCBKHDFC Bank, the price difference between what you expect and what you get is tiny. In thin stocks, it can be significant.
Best for: liquid large-cap stocks when speed matters more than price precision
Limit Order
Price-controlled
You specify the maximum price you’re willing to pay (buy limit) or minimum you’ll accept (sell limit). Only executes if the market reaches your price, no execution guarantee. If the stock never hits your price, the order expires at end of day.
Best for: mid/small caps, illiquid stocks, or when you have a specific entry price
Stop-Loss (SL)
Risk management
Triggers a sell once a stock hits your stop price. Once triggered, becomes a limit order at your specified limit price. You control the exit price but risk non-execution if the price gaps past your limit in a fast market.
Best for: limiting downside while preserving some price control
Stop-Loss Market (SLM)
Guaranteed exit
Triggers a market order once the stop price is hit. Guarantees execution but no price control. Final price may differ from the trigger price in fast-moving markets.
Best for: when guaranteed exit matters more than exact exit price
For systematic investing on RupeeCase: Most rebalancing executes as market orders placed at NSE open (9:15 AM). Strategies trade Nifty 500 stocks that are liquid enough for market order slippage to be minimal. The backtest cost model (0.5% round-trip) already accounts for this slippage conservatively.
When you place a trade, you’re paying multiple parties simultaneously. Most people notice only the brokerage, but the actual total cost includes six charges. Here’s the complete breakdown for a round-trip on ₹1,00,000 of shares:
Full Round-Trip Cost Breakdown
Illustrative, buy ₹1,00,000 + sell ₹1,00,000 = ₹2,00,000 total turnover
Varies by broker and trade size. Flat-fee brokers charge ₹20/order. Zero-brokerage delivery is offered by some. STT is non-negotiable.
As a percentage of the ₹2,00,000 turnover, round-trip cost ranges from 0.14% to 0.35%. Over a year of quarterly rebalancing on a ₹10 lakh portfolio, this amounts to ₹5,600 to 14,000 in pure transaction costs, before tax.
The individual charges explained
Brokerage: Flat-fee brokers (now the norm in India) charge a fixed amount per order, typically ₹20, regardless of order size. Some offer zero brokerage on equity delivery trades. Percentage-fee brokers charge 0.1 to 0.5%.
STT (Securities Transaction Tax): A government tax collected at source. For equity delivery trades: 0.1% on both buy and sell. For intraday trades: 0.025% on the sell side only. STT is the largest unavoidable cost in equity investing.
Exchange Transaction Charges: Fees paid to NSE or BSE for their infrastructure. NSE charges approximately 0.00345% for equity delivery. Small but real.
SEBI Turnover Fee: ₹10 per crore of turnover. Negligible for most retail portfolios.
GST: 18% charged on brokerage and exchange charges. Not on STT (which is a tax, not a service fee).
Stamp Duty: Applies on the buy side only. Most states charge 0.015% for equity delivery purchases.
The cost of frequent rebalancing: A strategy rebalancing 20 stocks monthly generates 20 buy + 20 sell orders = 40 orders per month, 480 per year. At ₹20 flat fee + STT + charges, that’s roughly ₹25,000 to 40,000 per ₹10 lakh portfolio annually, 2.5 to 4% of portfolio value, just in transaction costs. This is why RupeeCase strategies are designed to keep rebalancing frequency low, and why every backtest uses a 0.5% round-trip cost assumption.
Capital gains taxation, how your profits are taxed
When you sell shares at a profit, the government takes a share. The rate depends on one thing: how long you held the shares. Budget 2024 changed both the STCG and LTCG rates, so make sure you’re working with current numbers.
Short-Term Capital Gains (STCG)
20%
Applies when you sell equity shares held for 12 months or less. Rate raised from 15% to 20% in Budget 2024. No exemption threshold, tax applies from the first rupee of gain.
Held ≤ 12 months · No exemption
Long-Term Capital Gains (LTCG)
12.5%
Applies when you sell equity shares held for more than 12 months. Rate raised from 10% to 12.5% in Budget 2024. First ₹1.25 lakh of LTCG per financial year is tax-free.
Held > 12 months · ₹1.25L exempt
The 12-month holding rule in practice: If you bought INFYInfosys on January 15, 2024 and sell on January 14, 2025, that’s STCG at 20%. Sell on January 15, 2025 or later, that’s LTCG at 12.5% with the ₹1.25 lakh exemption. One day makes a meaningful difference on large positions.
STCG tax rate on equity held 12 months or less | from Budget 2024
12.5%
LTCG tax rate on equity held more than 12 months | from Budget 2024
₹1.25L
Annual LTCG exemption | gains below this threshold are tax-free each year
How LTCG is actually calculated
1
Calculate your gain
Sale price minus your cost of acquisition (what you paid). E.g., bought TCS at ₹3,500, sold at ₹4,200 after 18 months, gain = ₹700 per share. Multiply by shares held.
2
Apply the ₹1.25 lakh exemption
Total LTCG across all equity sales in a financial year, up to ₹1.25 lakh, is tax-free. If your total LTCG is ₹80,000, zero tax. If it’s ₹2 lakh, you pay 12.5% on ₹75,000 = ₹9,375 only.
3
Tax on the remaining gain
12.5% flat on LTCG above ₹1.25 lakh. No indexation benefit available for listed equity (unlike debt funds or real estate). Health and education cess of 4% applies on top of the base tax.
Tax loss harvesting, using losses to reduce your tax bill
Capital losses can be used to offset capital gains, reducing your tax liability. This is called tax loss harvesting.
STCL (Short-Term Capital Loss) can offset both STCG and LTCG
LTCL (Long-Term Capital Loss) can only offset LTCG, not STCG
Unabsorbed losses can be carried forward for 8 financial years
Practical example: You have ₹3 lakh LTCG from selling ITCITC shares held 2 years. You also have ₹80,000 LTCL from a position that didn’t work out. Net LTCG = ₹2.2 lakh. After the ₹1.25 lakh exemption, taxable LTCG = ₹95,000. Tax = ₹95,000 × 12.5% = ₹11,875. Without the loss, tax would have been ₹21,875. Tax loss harvesting saved ₹10,000.
How costs affect your real returns
Costs compound against you the same way returns compound for you. A strategy generating 18% CAGR before costs and taxes might deliver 13 to 15% after everything. The gap between gross and net return is what separates good strategy design from bad.
▼ Real return after costs and tax, illustrativeIllustrative only
Gross Return
18%
Before any costs
After Costs
16 to 17%
Brokerage, STT, charges deducted
After Tax
13 to 15%
LTCG/STCG on rebalancing gains
These are illustrative. Actual net returns depend on rebalancing frequency, holding periods, and tax bracket.
◆ Why RupeeCase always shows post-cost returns
Every backtest on RupeeCase deducts a 0.5% round-trip cost assumption per rebalance. This covers brokerage, STT, exchange charges, and estimated slippage. The strategies you see on the platform have already survived this cost hurdle. What you see is net, not gross. Most strategy vendors show gross returns. RupeeCase shows net.
Built into every backtest
RupeeCase deducts real transaction costs before showing you results
0.5% round-trip assumed per rebalance. No cherry-picked gross numbers. Capital stays in your broker.
Buy or sell immediately at the best available price. Guaranteed execution, no price control. Best for liquid stocks.
Limit Order
Buy or sell only at a specified price or better. Price control, but no execution guarantee if the market never reaches your price.
STT
Securities Transaction Tax, 0.1% on both buy and sell for equity delivery. Non-negotiable government tax paid by all investors.
STCG
Short-Term Capital Gains, profit from selling equity held 12 months or less. Taxed at 20% from Budget 2024.
LTCG
Long-Term Capital Gains, profit from equity held more than 12 months. Taxed at 12.5% with ₹1.25 lakh annual exemption, from Budget 2024.
Slippage
The difference between the expected trade price and the actual executed price. Higher in illiquid stocks. RupeeCase backtests include a slippage estimate in the 0.5% round-trip cost assumption.
Tax Loss Harvesting
Selling positions at a loss to offset capital gains, reducing tax liability. Short-term losses can offset both STCG and LTCG. Losses carry forward 8 years.
Round-Trip Cost
Total cost of buying and then selling a position | brokerage on both sides plus STT, charges, GST, and stamp duty. RupeeCase assumes 0.5% round-trip in all backtests.
TK
A note from the author
The cost assumption that changes everything
When I was building institutional strategies, the first thing we did before presenting any backtest was agree on a cost assumption. At banks and funds, the assumption was typically 0.5 to 1% round-trip depending on the liquidity of the universe. Any strategy that couldn’t survive that cost hurdle was shelved immediately, regardless of how good it looked gross.
Retail platforms often don’t show you this. They show you gross returns, before the costs and taxes that you will actually incur. When I built RupeeCase, building the 0.5% cost deduction directly into the backtesting engine was non-negotiable. The strategies you see on the platform have already passed that test. If it doesn’t work net, it doesn’t ship.
All content on this page is original work by Tanmay Kurtkoti and QC Alpha Technologies Pvt Ltd. Protected under Indian copyright law and international IP conventions. Reproduction or commercial use requires written permission. Licensing: tanmay@rupeecase.com
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