Worried about GST? Need not atleast for your Stock Market Trading

Nutan Gupta

29 Jun 2017

New Page 1

Goods and Service Tax (GST) is all set to roll out from July 1 onwards. There has been a lot of discussion about the tax implications that GST will have on various sectors. Under GST, the tax on financial services transactions will rise from the current 15% to 18%. Financial service transactions include banking, mutual funds, insurance and stock broking.

Though this will impact a lot of traders and investors around the country, clients who have an account with 5paisa.com need not worry about the same. This is where the advantage of trading with 5paisa.com comes in. A discount broker like us do not charge brokerage. Clients pay a flat fee irrespective of the Turnover. As brokerage is extremely less, the impact of GST which will replace Service Tax will also be miniscule.

Let’s have a look on how the implementation of GST rate will impact –

A trader, and

An investor

Trader

A trader trades very frequently and hence any change in the tax rate would have a major impact on his profit. However, if one is trading with us as the brokerage itself is very less, the change in GST rate of 15% to 18% will hardly impact.

Impact of GST on a Trader

5paisa

10 lot of Nifty Futures

Traditional Broker

Prior to GST

(15%)

Post GST

(18%)

Prior to GST

(15%)

Post GST

(18%)

Buy Nifty @9600 & Sell@9700

Buy Nifty @9600 & Sell Nifty@9700

Buy Nifty @9600 & Sell@9700

Buy Nifty @9600 & Sell@9700

Rs 1,44,75,000

Rs 1,44,75,000

Amount of trade

Rs 1,44,75,000

Rs 1,44,75,000

Rs 20

Rs 20

Brokerage

Rs 14475

Rs 14475

Rs 3

Rs 3.6

Applicable Taxes

Rs 2171.25

Rs 2605.5

Rs 23

Rs 23.6

Total Cost

Rs 16646.25

Rs 17080.5

The above table the shows the difference in brokerage a trader has to pay when he does F&O with a discount broker and traditional broker. If you trade with 5paisa.com, the extra tax after GST that you have to pay is just 60 paisa, while with a traditional broker it is Rs 434.25, which is 723 times higher.

The total cost of your brokerage is way too higher when you trade with a traditional broker.

Investor

An investor is the one who invests in the market with a long-term horizon. Though he may think that it is a one-time charge, the fact is that higher GST can eat into the profits. On the other hand, if one invests with a discount broker, majority chunk of your profit of your profit can be saved.

Impact of GST on an Investor

5paisa

An investors buys a portfolio worth Rs 1 lakh

Traditional Broker

Prior to GST

(15%)

Post GST

(18%)

Prior to GST

(15%)

Post GST

(18%)

Buy@1 lakh & Sell@Rs 1.5 lakh

Buy@1 lakh & Sell@Rs 1.5 lakh

Buy@1 lakh & Sell@Rs 1.5 lakh

Buy@1 lakh & Sell@Rs 1.5 lakh

Rs 250000

Rs 250000

Amount of trade

Rs 250000

Rs 250000

Rs 20

Rs 20

Brokerage

Rs 750

Rs 750

Rs 3

Rs 3.6

Applicable Taxes

Rs 112.5

Rs 135

Rs 23

Rs 23.6

Total Cost

Rs 862.5

Rs 885

Total expenses increase by 60 paisa only

Total expenses increased by Rs 22.5

The above table shows the difference in brokerage when an individual investor buys a portfolio with a discount broker and when he buys it with a traditional broker. The total tax that an investor pays after GST is just 60 paisa more, while it is 30 times more with a traditional broker.

So, if you want to beat the increase in your tax outflow because of GST, switch to 5paisa.com

Have Referral Code?

Similar articles

  • Responses
  • Patidar Samaj

    - 2 hrs ago

    This article claims RJio was given a "Backdoor Entry" into the 4G Based Voice Routing. The peculiar aspect is without the Voice License, Rjio would have been a mere ISP. With the license, it is now a holistic communications service provider, with ability to exponentially scale the bouquet of products. The events indicate it was meticulously planned way before the auctions because the auctions were clear on the agenda: 4G for internet only.

Load More
mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


Banner

Worried about GST? Need not atleast for your Stock Market Trading

Nutan Gupta

29 Jun 2017

New Page 1

Goods and Service Tax (GST) is all set to roll out from July 1 onwards. There has been a lot of discussion about the tax implications that GST will have on various sectors. Under GST, the tax on financial services transactions will rise from the current 15% to 18%. Financial service transactions include banking, mutual funds, insurance and stock broking.

Though this will impact a lot of traders and investors around the country, clients who have an account with 5paisa.com need not worry about the same. This is where the advantage of trading with 5paisa.com comes in. A discount broker like us do not charge brokerage. Clients pay a flat fee irrespective of the Turnover. As brokerage is extremely less, the impact of GST which will replace Service Tax will also be miniscule.

Let’s have a look on how the implementation of GST rate will impact –

A trader, and

An investor

Trader

A trader trades very frequently and hence any change in the tax rate would have a major impact on his profit. However, if one is trading with us as the brokerage itself is very less, the change in GST rate of 15% to 18% will hardly impact.

Impact of GST on a Trader

5paisa

10 lot of Nifty Futures

Traditional Broker

Prior to GST

(15%)

Post GST

(18%)

Prior to GST

(15%)

Post GST

(18%)

Buy Nifty @9600 & Sell@9700

Buy Nifty @9600 & Sell Nifty@9700

Buy Nifty @9600 & Sell@9700

Buy Nifty @9600 & Sell@9700

Rs 1,44,75,000

Rs 1,44,75,000

Amount of trade

Rs 1,44,75,000

Rs 1,44,75,000

Rs 20

Rs 20

Brokerage

Rs 14475

Rs 14475

Rs 3

Rs 3.6

Applicable Taxes

Rs 2171.25

Rs 2605.5

Rs 23

Rs 23.6

Total Cost

Rs 16646.25

Rs 17080.5

The above table the shows the difference in brokerage a trader has to pay when he does F&O with a discount broker and traditional broker. If you trade with 5paisa.com, the extra tax after GST that you have to pay is just 60 paisa, while with a traditional broker it is Rs 434.25, which is 723 times higher.

The total cost of your brokerage is way too higher when you trade with a traditional broker.

Investor

An investor is the one who invests in the market with a long-term horizon. Though he may think that it is a one-time charge, the fact is that higher GST can eat into the profits. On the other hand, if one invests with a discount broker, majority chunk of your profit of your profit can be saved.

Impact of GST on an Investor

5paisa

An investors buys a portfolio worth Rs 1 lakh

Traditional Broker

Prior to GST

(15%)

Post GST

(18%)

Prior to GST

(15%)

Post GST

(18%)

Buy@1 lakh & Sell@Rs 1.5 lakh

Buy@1 lakh & Sell@Rs 1.5 lakh

Buy@1 lakh & Sell@Rs 1.5 lakh

Buy@1 lakh & Sell@Rs 1.5 lakh

Rs 250000

Rs 250000

Amount of trade

Rs 250000

Rs 250000

Rs 20

Rs 20

Brokerage

Rs 750

Rs 750

Rs 3

Rs 3.6

Applicable Taxes

Rs 112.5

Rs 135

Rs 23

Rs 23.6

Total Cost

Rs 862.5

Rs 885

Total expenses increase by 60 paisa only

Total expenses increased by Rs 22.5

The above table shows the difference in brokerage when an individual investor buys a portfolio with a discount broker and when he buys it with a traditional broker. The total tax that an investor pays after GST is just 60 paisa more, while it is 30 times more with a traditional broker.

So, if you want to beat the increase in your tax outflow because of GST, switch to 5paisa.com

Have Referral Code?