What are exchange transaction charges?

These are fees NSE or BSE charge for using their trading infrastructure to match and execute your order, and the broker simply passes them through on the contract note. The rate is a small percentage of turnover, but it’s not uniform: equity cash market, equity futures, equity options, and other segments each have their own exchange transaction charge slab, and NSE and BSE rates aren’t always identical to each other. Because both major exchanges compete on this to some extent, brokers sometimes route orders in a way that affects which exchange’s rate applies, though for individual retail investors this rarely matters unless you’re actively choosing an exchange at order placement. You look at exchange transaction charges as background noise on a single trade but check them alongside brokerage when you’re evaluating cost for high-frequency intraday or F&O trading, where the percentage adds up over many trades.