how to calculate the brokerage and taxes in nifty futures and how profits are generated

The following step shows how to calculate the brokerage and taxes in nifty futures and how profits are generated.

The amount required to trade in one lot of nifty is Rs.25,000 (approx) and if you plan to trade in mini nifty lot then the amount required is Rs.14,000 (approx).
This amount is called as margin amount. So traders require only margin amount to buy and sell Nifty future contract.

Now let’s see the taxes calculation and how profits are generated
Suppose if you buy one nifty lot. One nifty lot consists of 50 nifty quantities so the amount required to buy the one lot of nifty is the margin amount and not the full amount.
The full amount becomes = 50 nifty Qty x 4800 (Nifty contract current price)
So the full amount is = 2,40,000.
But you only need the margin amount to buy one lot of nifty.
= you bought one nifty lot, which will cost
= 50 nifty qty x current nifty contract price
= 50 x 4800
= 2,40,000

The brokerage calculation on Buying Amount
The brokerage is 0.03 paisa for buying and 0.03 paisa for selling (it is the brokerage rate offered with our demat account)
= so the brokerage for buying one nifty lot is
= Rs.2,40,000 x 0.03/100
= Rs.72

The Taxes calculation on Buying Amount
In addition to brokerage, the trader has to pay the taxes to Government -
1. Service Tax (ST) = 10.36% - ST is applicable only on brokerage. It applies on both buying & selling brokerage.
2. Regulatory charges + stamp duty charges = total comes to = 0.004%. Applicable to both buying and selling amount.

1. Service Tax is calculated only on brokerage - It is 10.36%
    In our above example, the brokerage has come to Rs.72
    = 72 x 10.36/100
    = Rs.7.45

2. Regulatory charges and stamp duty charges - comes to total 0.004%.
    The buying amount is 2,40,000
    = 2,40,000 x 0.004/100
    = Rs.9.60

So the total Taxes you have to pay on buying amount is
Rs 7.45 + 9.6 = 17.05

Now the total amount you have to pay to broker including the brokerage & taxes for buying one nifty lot is
Brokerage = Rs.72
Total Taxes = Rs.17.05
Total amount comes to Rs.89.05

Profit’s generated on One Nifty lot
According to our strategy we ask our traders to book 20 points profit.
= Your buying price was 4800 so your selling price will become 4820.
= So the profit earned by buying and selling one nifty lot is 20 points x 50 quantity (one nifty lot)
= Rs.1000

The brokerage calculation on Selling Amount
= Brokerage is 0.03% on selling amount
= the selling amount is 4820 x 50 (one nifty lot) = 2,41,000
= Brokerage is 2,41,000 x 0.03/100 = Rs.72.30

The Taxes calculation on Selling Amount
In addition to brokerage, the trader has to pay the taxes to Government -
1. Service Tax (ST) = 10.36% - ST is applicable only on brokerage. It applies on both buying & selling brokerage.
2. STT (Security Transaction Tax) = 0.017% - STT is applicable only on selling amount.
3. Regulatory charges + stamp duty charges = total comes to = 0.004% = Applicable to both buying and selling amount.

Service Tax calculation (ST)
ST is 10.36%
ST is calculated on brokerage charge and the brokerage on selling amount is Rs.72.30
= 72.30 x 10.36/100
= Rs.7.46

Security Transaction Tax (STT)
It is only applied on selling amount = 0.017%
The selling amount is 2,41,000
So 2,41,000 x 0.017/100
= Rs.40.97

Regulatory and stamp duty charges are 0.004%
The selling amount is 2,41,000
So 2,41,000 x 0.004/100
= Rs. 9.64

So the total Taxes you have to pay on Selling amount is
= 7.46+40.97+9.64
= Rs. 58.07

The total amount you have to pay to broker including the brokerage & taxes for Selling one nifty lot is
Brokerage = Rs.72.30
Total Taxes = Rs.58.07
Total amount comes to Rs.130.37

Total brokerage and taxes to pay for buying and selling one Nifty Future contract comes to
The buying and selling brokerage + buying and selling taxes Which comes to,
Buying amount including taxes and brokerage comes to = Rs.89.05
Selling amount including taxes and brokerage comes to = Rs.130.37
So total amount comes to Rs.219.42

Your Net profit
The profit generated is 20 points for one nifty lot which comes to Rs.1000 and after deducting the total charges of Rs.219.42, your net profit comes to Rs.780.58.

Please note -
1. The above calculation is based on only one nifty lot, if you buy more nifty lots then the profits will multiplied accordingly
    means for one lot the profit generated is Rs.780, for two lots the profit will be Rs.780 x 2 = Rs.1561 and so on it keeps
    on increasing as you buy more lots.

2. Small trader can buy mini nifty lot which consist of 20 quantity and cost around Rs.14,000 (approx).
    The brokerage and taxes calculation method for mini lot will be same as we have done above.
    If you buy mini nifty lot and took profit of 20 points then your profit will be 20 points x 20 quantity = Rs.400
    The all brokerage and taxes comes to approx Rs.100, so your net profit for one mini nifty lot will be Rs.300.

3. The nifty contract price is taken as 4800, if this price comes down then your profit will also increases.

4. The taxes used were the latest at the time of writing this article. For latest taxes please contact us or your broker.

5. For any questions and clarification you can write to us please visit here to write to us.

6. We provide daily nifty trading tips which are generating profit on daily basis for more information please visit here

7. To check how much profits have been generated in past by our nifty trading tips please visit here.