Every time a trade of yours fills on NSE or BSE, your broker is legally bound to send you one document before the next day’s trading begins: the contract note. Most investors glance at the net amount, confirm it roughly matches what they expected, and file it away unread. That habit quietly costs money. A broker contract note is the single legally enforceable record of your trade — and every line on it, from the order time to the last rupee of GST, is there for a reason. This guide decodes all of them, shows you a full worked example, and explains the 24-hour rule that gives the document its legal weight.
What a broker contract note is and why it is legally binding
A contract note is the confirmation your stockbroker issues after executing a trade on your behalf. It records exactly what was bought or sold, at what price, in what quantity, and what it finally cost you after every charge. It is not a courtesy email — it is the primary evidence of the transaction between you and your broker.
That legal status matters in practice. If a trade shows up that you never placed, if the price looks wrong, or if the charges seem inflated, the contract note is the document you point to. It is also the record your tax advisor uses to compute capital gains, and the first thing a back-office or compliance team reconciles against the exchange’s trade file.
Treat the contract note as your receipt, your audit trail, and your tax document rolled into one. The investors who read it line by line are the ones who catch a wrong brokerage slab or an extra charge early, while it is still easy to fix.
Understanding this document is also foundational if you are aiming at a markets career rather than just investing. The people who prepare, check and reconcile contract notes sit in a broker’s operations and compliance desks — roles that a structured NCFM certification exam preparation is built to open up.
The anatomy of a contract note: every line explained
A contract note looks dense, but it is really three blocks stacked on top of each other: who and what (identity), the trade itself, and the money. Once you know which block you are looking at, the document reads quickly.
The identity and header block
This is the top of the note. It names the trading member (your broker) along with its SEBI registration number, the exchange and segment, the contract note number and date, and your own unique client code (UCC) and PAN. If any of these identity fields are blank or wrong, the note is defective — raise it with your broker immediately.
The trade block
This is the heart of the note: one row per trade. For each, you get the order number and order time, the trade number and trade time, the security name and its ISIN, a buy or sell flag, the quantity, and the executed price per unit. The two timestamps are worth noticing — the order time is when you placed it, the trade time is when it actually filled, and the gap between them tells you how liquid the stock was.
The value and charges block
Here the note moves from quantity to money. It starts with the gross trade value (quantity times price), then stacks every statutory charge and the brokerage, and ends with the net amount payable or receivable. Below that sit the settlement number and settlement date, and finally the broker’s digital signature, which authenticates the whole document.
| Block | What it contains | Why it matters |
|---|---|---|
| Identity | Broker name & SEBI reg. no., exchange, note no. & date, your UCC & PAN | Confirms the note is genuinely yours and from a registered broker |
| Trade | Order & trade IDs and times, security, ISIN, buy/sell, quantity, price | Lets you verify you got the price and quantity you expected |
| Value & charges | Gross value, brokerage, STT, stamp duty, exchange & SEBI charges, GST, net amount | Shows the true cost of the trade and feeds your tax records |
Decoding the charges: STT, stamp duty, exchange, SEBI fee and GST
The charges block is where most confusion lives, because half a dozen different bodies each take a small cut. Here is what each line is, in plain terms. (Rates below are the standard equity rates; they can change, so treat them as a guide and confirm the current figure with your broker or the exchange.)
- Brokerage — your broker’s own fee. A discount broker may charge a flat amount or nothing on delivery; a full-service broker charges a percentage. This is the one line your broker actually controls.
- STT (Securities Transaction Tax) — a central tax. On equity delivery it is 0.1% on both the buy and sell sides; on intraday equity it is 0.025% on the sell side only. Futures and options carry their own STT rates, which have been revised more than once — check the current figure for those segments.
- Stamp duty — a single nationwide rate since 1 July 2020, paid by the buyer only: 0.015% on delivery and 0.003% on intraday. Before that reform it varied by state; now it is uniform regardless of where you live.
- Exchange transaction charge — what NSE or BSE levies for using its platform, roughly 0.003% of turnover on cash equity (about ₹300 per crore; confirm the current tariff, as exchanges revise it).
- SEBI turnover fee — the regulator’s charge, a tiny ₹10 per crore (0.0001%) of turnover.
- GST — 18%, but only on the brokerage, the exchange transaction charge and the SEBI fee. It is not levied on STT or stamp duty.
The single most useful thing to internalise: STT and brokerage usually dominate your cost, while the SEBI fee is almost nothing. The chart below shows the shape of a typical delivery buy.
On a ₹1,00,000 delivery buy, STT and brokerage dwarf the SEBI fee
Source: broker charge schedules (illustrative, equity delivery), 2025.
Want to understand the market rules behind every charge?
The contract note is one small corner of how brokers, exchanges and SEBI actually work. NIFM’s capital-market programs walk you through the full system — bilingual, self-paced, with exam preparation for the certifications these roles need.
Explore the SEBI-NISM certification exam preparation →A worked example: a ₹1,00,000 delivery buy, line by line
Numbers make this concrete. Suppose you buy 200 shares of a company at ₹500 each — a gross value of ₹1,00,000 — as a delivery trade, through a discount broker charging a flat ₹20. Here is how your contract note builds up the final cost.
| Line | How it is worked out | Amount |
|---|---|---|
| Gross trade value | 200 shares × ₹500 | ₹1,00,000 |
| Brokerage | Flat (discount broker) | ₹20.00 |
| STT | 0.1% of ₹1,00,000 (buy side) | ₹100.00 |
| Exchange transaction charge | approx. 0.003% of turnover | ₹3.00 |
| SEBI turnover fee | ₹10 per crore (0.0001%) | ₹0.10 |
| Stamp duty | 0.015% of ₹1,00,000 (buyer) | ₹15.00 |
| GST | 18% of (brokerage + exchange + SEBI fee) | ₹4.16 |
| Net amount debited | gross + all charges | ₹1,00,142.26 |
So a ₹1,00,000 purchase actually costs you about ₹1,00,142 — roughly ₹142 in total charges, or around 0.14% of the trade. On the sell side you would pay STT again (another 0.1% on delivery) plus brokerage, exchange and SEBI charges and GST, but no stamp duty, since that falls on the buyer only. Reading your contract note this way tells you your real round-trip cost before you ever celebrate a “profit”.
Physical vs electronic contract notes and the 24-hour rule
Almost every contract note today is electronic — an ECN delivered to your email — but the rules around it are specific, and they exist to protect you.
An Electronic Contract Note (ECN) can only be issued if you have given written authorisation, signed by you personally. A power-of-attorney holder or an authorised person cannot sign it on your behalf. You must supply your own email address — the broker is not allowed to create one for you — and every ECN emailed to you must be digitally signed. If you prefer paper, you retain the right to receive physical contract notes instead.
The timing rule is the one to remember: your broker must issue the contract note within 24 hours of the trade being executed. SEBI has penalised brokers that failed to do this; in one case a broker blamed the delay on the manual steps of printing, signing and posting physical notes — which is exactly why the electronic, digitally signed note became the norm.
| Feature | Electronic (ECN) | Physical |
|---|---|---|
| Delivery | ✓ Emailed, usually same day | Posted or collected, slower |
| Authorisation needed | Written consent, signed by you personally | Default, no extra consent |
| Authentication | ✓ Digitally signed | Physically signed/stamped |
| Record-keeping | Easy to store and search | Can be lost or damaged |
Whichever form you choose, the contract note is the bridge between your trade and its settlement. The same care that goes into reconciling it is exactly the discipline a broking back office runs on — we covered those roles in our guide to the top back-office jobs in stock broking.
How to actually use your contract note
Reading the note is the start; using it is the habit that pays off. Do three things with every contract note you receive:
- Reconcile it the same day. Check the security, quantity, price and side against what you intended to trade. Catching an error on day one is far easier than disputing it weeks later.
- File it for taxes. Your contract notes are the raw material for computing capital gains and for claiming STT and charges where allowed. Keep them organised by financial year.
- Use it to dispute cleanly. If something is wrong, the contract note — with its SEBI registration number, timestamps and digital signature — is the document that backs your complaint to the broker, and if unresolved, to the exchange or SEBI.
Before opening an account that generates these notes, it helps to understand the verification that sits in front of it — our explainer on the KRA KYC process and CKYC walks through how a broking firm verifies you. And if the operations side of broking interests you as a career, our comparison of the dealer vs relationship manager roles is a useful next read.
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Start the SEBI-NISM certification exam preparationFrequently Asked Questions
What is a broker contract note?
A broker contract note is the legally enforceable document your stockbroker issues after executing a trade for you. It records the security, quantity, price, order and trade times, and every charge — brokerage, STT, stamp duty, exchange and SEBI fees, and GST — down to the net amount you paid or received. It is your official proof of the transaction.
How long does a broker have to send a contract note?
A broker must issue the contract note within 24 hours of the trade being executed. This is a regulatory requirement, and SEBI has penalised brokers who failed to meet it. Most brokers today send a digitally signed electronic contract note to your registered email the same day the trade fills.
What charges appear on a contract note?
A typical equity contract note shows brokerage (your broker’s fee), STT, the exchange transaction charge, the SEBI turnover fee, stamp duty, and 18% GST on the brokerage, exchange and SEBI charges. STT and brokerage are usually the largest lines, while stamp duty is charged to the buyer only and the SEBI fee is very small.
What is the difference between an electronic and a physical contract note?
An electronic contract note (ECN) is emailed to you, digitally signed, and requires your written authorisation signed personally — not by a power-of-attorney holder. A physical contract note is the paper default and needs no extra consent. Both carry the same legal weight; the ECN is simply faster to deliver and easier to store.
Why should I read my contract note instead of just checking the net amount?
Because the detail is where errors hide. Reading every line lets you confirm the price, quantity and side were correct, verify the charges match your broker’s stated rates, and keep accurate records for tax. If a trade is ever disputed, the contract note — with its timestamps, SEBI registration number and digital signature — is the evidence you rely on.
Disclaimer: This article is for educational purposes only and does not constitute investment advice. Markets carry risk — please do your own research or consult a qualified financial professional before investing. NIFM provides training and exam preparation; certification exams conducted by regulatory or professional bodies are administered by those bodies independently.
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