A contract note is the single most important document your broker sends you, yet most investors never open it. It is the legally enforceable confirmation that a trade was executed on your behalf — and it itemises every paisa of charges you actually paid. If you have ever wondered why a ₹50,000 share purchase cost you ₹50,000-plus, the answer is hidden in this one PDF. This guide walks through the contract note field by field, decodes each statutory charge, and shows a worked example so you can verify your own trades and use the document at tax time.
To open or compare a trading-and-demat account first, see our guide to the best demat accounts in India 2026 and the full demat account comparison.
What is a contract note?
A contract note is the legal record of trades executed on a stock exchange (NSE or BSE) through your broker on a given trading day. Under SEBI and exchange regulations, a registered stockbroker must issue a contract note to every client for every executed trade. It establishes the contractual relationship between you and the broker for those transactions and is legally enforceable — in the event of a dispute before the exchange or SEBI's investor grievance mechanism, the contract note is the primary evidence of what was bought or sold, at what price, and at what cost.
It is distinct from your DP charges and your demat holding statement. The contract note covers the trade; the demat statement covers the securities sitting in your account. If you are new to all of this, our explainer on what a demat account is and how it works sets the foundation.
The Electronic Contract Note (ECN)
Almost every broker today issues an Electronic Contract Note (ECN) rather than a paper one. SEBI permits ECNs provided they are digitally signed (using a valid digital signature certificate) and delivered to the email address the client has registered and authorised for this purpose. The broker must issue the contract note within 24 hours of the trade being executed — typically you receive it by the evening of the same trading day or the next morning.
Practical points to remember:
- The ECN usually arrives as a password-protected PDF. The password is generally a combination of your PAN and date of birth — your broker specifies the exact format.
- Because it is digitally signed, the ECN carries the same legal validity as a physical contract note. Do not treat it as a casual email summary.
- Brokers also maintain a log proving the ECN was sent; if your email bounces repeatedly, regulations require the broker to switch you to physical delivery.
Key fields on a contract note — line by line
The top section identifies the trade and the parties. The fields you should always check are:
- Contract note number and date: A unique running number per client, plus the trading date.
- Order number: The reference for the order you placed.
- Trade number and trade time: The exchange-generated reference and the exact timestamp of execution. This is useful if you need to prove when a trade happened.
- Settlement number / settlement date: When the obligation settles (Indian equities settle on a T+1 basis).
- Security / scrip name and ISIN: The name of the stock and its 12-character International Securities Identification Number, which uniquely identifies the security.
- Buy / Sell indicator: Whether each line is a purchase or a sale.
- Quantity and price: Number of shares and the rate per share at which they were executed.
- Gross value: Quantity multiplied by price, before charges.
- Net amount: Gross value adjusted for all charges — the figure actually debited from or credited to your funds.
The bottom section is the charges break-up, where most investors get confused. Let us decode each line.
The charges break-up — what each line means
Brokerage
The fee the broker charges for executing your order. Discount brokers commonly charge a flat fee (often around ₹20 per executed order or a small percentage, whichever is lower) for intraday and F&O, and frequently zero brokerage on equity delivery. Full-service brokers may charge a percentage of turnover. For a side-by-side view, see our demat account charges comparison.
Securities Transaction Tax (STT)
A tax levied by the central government on securities transactions. For equity delivery, STT is charged at 0.1% on both the buy and the sell side of the transaction value. For intraday equity, STT applies only on the sell side at a lower rate, and rates differ for futures and options. STT is a statutory levy — neither the broker nor GST applies on top of it.
Exchange transaction charges
Charged by the exchange (NSE or BSE) on the turnover of your trade. The rate varies by exchange and by segment (cash, F&O) and is revised from time to time, so check the figure against your broker's published charge list for the relevant period.
SEBI turnover fee
A regulatory fee charged by the Securities and Exchange Board of India on the value transacted. It is levied at ₹10 per crore of turnover — that is, 0.0001% of the transaction value. On a ₹50,000 trade this is a fraction of a rupee, but it always appears as a separate line.
GST (Goods and Services Tax)
GST is charged at 18%, but importantly only on the brokerage, exchange transaction charges and the SEBI turnover fee — the service components. GST is not applied to STT or stamp duty, which are themselves taxes/duties, not services. This is a common point of confusion: investors assume 18% applies to the whole bill, when it applies only to the service charges.
Stamp duty
A duty on the transaction. Since 1 July 2020, stamp duty on securities transactions was unified across all states under amendments to the Indian Stamp Act, collected by the exchange/depository and distributed to states. It is levied on the buy side only. For equity delivery the rate is 0.015% of the buy value (rates differ for intraday, F&O and other instruments). Because it is charged once on the purchase, you will see it only on buy transactions.
IPFT and other line items
Some contract notes show an Investor Protection Fund Trust (IPFT) charge — a small exchange-levied contribution to the investor protection fund. Other minor lines may appear depending on the segment. These are typically tiny amounts.
Worked example: a ₹50,000 equity delivery buy
Suppose you buy shares worth a gross value of ₹50,000 as an equity-delivery purchase through a discount broker that charges zero delivery brokerage. The charge lines on your contract note would look approximately like the table below. Treat the figures as illustrative — exact paise depend on the broker, exchange and prevailing rates, so always reconcile against your own note.
| Charge | Basis | Approx. amount |
|---|---|---|
| Gross trade value | — | ₹50,000.00 |
| Brokerage | Zero on delivery (discount broker) | ₹0.00 |
| STT | 0.1% of buy value | ₹50.00 |
| Exchange transaction charges | Per exchange rate on turnover | ≈ ₹1.50 |
| SEBI turnover fee | ₹10 per crore (0.0001%) | ≈ ₹0.05 |
| GST | 18% on (brokerage + exchange + SEBI) | ≈ ₹0.28 |
| Stamp duty | 0.015% of buy value (buy side) | ₹7.50 |
| Total charges | — | ≈ ₹59.33 |
| Net amount debited | Gross + charges | ≈ ₹50,059.33 |
Notice that STT (₹50) and stamp duty (₹7.50) together account for the bulk of the cost on a zero-brokerage delivery buy, and GST is calculated only on the small service-charge sliver — not on the ₹50,000, not on STT, and not on stamp duty. That single insight explains most contract notes you will ever read.
How to verify your trades — and why it matters
Reading the contract note is not just an academic exercise. There are three concrete reasons to check it every time:
- Catching errors and disputes: Match the quantity, price, buy/sell flag and ISIN against the orders you actually placed. If a trade you did not authorise appears, or the price differs materially from what you intended, the contract note is your evidence to raise a complaint with the broker and, if unresolved, with the exchange or SEBI.
- Capital gains and ITR: Your buy and sell contract notes establish the cost of acquisition and sale consideration for computing capital gains. While brokers also issue a consolidated capital-gains statement, the contract note is the underlying source document, and the trade date on it determines whether a gain is short-term or long-term.
- Record retention: As a prudent practice, keep your contract notes for around seven years — this comfortably covers the periods over which tax records may be examined and any trade-related dispute could arise. Save the password-protected PDFs in a backed-up folder.
If you are still building your foundation, our beginner's complete guide to investing in stocks in India walks through opening an account, placing your first order, and then — exactly as covered here — reading the confirmation that follows.
Frequently Asked Questions
What is a contract note and is it legally binding?
A contract note is the document a SEBI-registered stockbroker issues confirming trades executed on your behalf on an exchange. It records the security, quantity, price, buy/sell side and all charges. It establishes the contractual relationship between you and the broker and is legally enforceable, making it the primary evidence in any trade dispute.
When should I receive my contract note after a trade?
Under SEBI regulations, the broker must issue the contract note within 24 hours of the trade being executed. With an Electronic Contract Note (ECN), you typically receive a digitally signed, password-protected PDF by email the same evening or the following morning.
What is the difference between gross value and net amount on a contract note?
Gross value is simply quantity multiplied by price — the value of the shares before any charges. Net amount is the gross value adjusted for all charges (brokerage, STT, exchange and SEBI fees, GST, stamp duty), and it is the actual figure debited from or credited to your trading funds.
Is GST charged on STT and stamp duty?
No. GST at 18% applies only to the service components — brokerage, exchange transaction charges and the SEBI turnover fee. It is not levied on STT or stamp duty, which are themselves a tax and a duty respectively. This is why GST on most retail trades is a very small amount.
How much is stamp duty on equity delivery and who pays it?
Since 1 July 2020, stamp duty on securities was unified across states. It is charged on the buy side only, and for equity delivery the rate is approximately 0.015% of the buy value. Because it applies once on the purchase, you will see it only on buy transactions, not on sales.
How long should I keep my contract notes?
It is prudent to retain contract notes for around seven years. They are the source documents for computing capital gains in your income tax return and serve as evidence in any trade-related dispute. Save the password-protected ECN PDFs in a backed-up location so you can retrieve any year's records.