Contract Note Explained: How to Read and Verify It
A contract note is the legal record of the trades your broker executed for you on a given day, sent by email or posted in your account by the end of that trading day or the next morning. It shows every buy and sell, the exact price and time, the exchange used, and every rupee of brokerage, tax and fee deducted.
A contract note is a confirmation of trades issued by a SEBI registered stock broker, digitally signed, listing quantity, price, order and trade numbers, brokerage, statutory charges and the net amount you owe or receive. Nothing your broker charges can sit outside it. That single fact makes it the most useful document new traders ignore.
Below: what each block means, how the charges stack up on a real trade, how to verify the document, and what to do when the numbers look wrong.
What a contract note actually is
Think of it as an invoice with legal weight. If you ever dispute a trade with your broker, the exchange or a SEBI grievance forum, the contract note is the primary evidence. It confirms what happened; it is not an instruction, so it arrives after execution.
Brokers are required to issue it promptly after the trade, generally within 24 hours. Most send a password protected PDF the same evening, and the password is usually your PAN in capital letters, sometimes combined with your date of birth.
It is not your ledger, which tracks money over time, and not the consolidated account statement from NSDL or CDSL, which shows what you own.
What must appear on every contract note
Trade identity details
The top block names the broker, its SEBI registration number and office, plus your name, PAN and unique client code. Then come the trade date, settlement number and settlement date. Indian equities normally follow the T+1 cycle, so a Monday trade settles on Tuesday.
The trade table lists order number, order time, trade number, trade time, security, buy or sell, quantity, price and brokerage. Those two timestamps matter more than people expect. If you believe your order sat unfilled while price ran away, they are how you prove it.
The charges block
Brokerage is your broker’s own fee. Everything below it is collected on behalf of somebody else: the government, the exchange, SEBI or the depository. Knowing which is which tells you what is negotiable.
Reading the charges line by line
Rates that can change are described rather than fixed, so confirm current numbers on the exchange or your broker’s tariff page.
| Line item | Who receives it | How it is calculated |
|---|---|---|
| Brokerage | Your broker | Flat per order or a percentage of turnover |
| Securities Transaction Tax | Government of India | 0.1% both sides on delivery, 0.025% on intraday sells, 0.05% on futures sells, 0.15% on option premium sold |
| Exchange transaction charge | NSE or BSE | A small percentage of turnover, differing by segment |
| SEBI turnover fee | SEBI | A very small percentage of turnover |
| Stamp duty | State government | Buy side only, rate varies by segment |
| GST | Government of India | 18% on brokerage plus transaction charges, not on STT |
| DP charge | Depository and DP | Flat amount per scrip when you sell delivery holdings |
Two lines catch traders out. GST applies to brokerage and transaction charges, so a zero brokerage broker still shows GST. And in options, STT of 0.15% applies to premium when you sell an option, but to settlement value when an option is exercised or assigned at expiry. That gap is why a small in the money option left to expire can cost far more than squaring it off. If you trade expiries, read up on what happens on options expiry day first.
A worked example: one delivery buy, price to net debit
Suppose you buy 100 shares at Rs 450 each. Turnover is 100 multiplied by 450, so Rs 45,000. Walk down the charges using illustrative rates.
- Brokerage: suppose a flat Rs 20.
- STT at 0.1% on a delivery buy: 0.001 multiplied by 45,000 equals Rs 45.
- Exchange transaction charge: suppose Rs 1.34.
- SEBI turnover fee: suppose Rs 0.05.
- Stamp duty on the buy side: suppose Rs 6.75.
- GST at 18% on brokerage plus transaction charge: 0.18 multiplied by 21.34 equals Rs 3.84.
Add them: 20 plus 45 plus 1.34 plus 0.05 plus 6.75 plus 3.84 equals Rs 76.98. Net debit is Rs 45,076.98. Divide 76.98 by 45,000 and your all in cost is about 0.17% of turnover, so the stock must rise roughly 0.35% before a round trip breaks even.
That 0.35% is the number to remember. It explains why a strategy aiming for a 0.5% move is fighting its own cost structure.
How do you verify a contract note is genuine?
- Check that the PDF’s digital signature panel shows a valid signature in the broker’s name. Without one, it is not a valid contract note.
- Match the SEBI registration number on the note against the SEBI intermediary register.
- Confirm your PAN and unique client code. A wrong client code means the trade may not be tagged to you.
- Compare quantity, price and trade time against your order history in the app.
- Reconcile the net obligation with your funds ledger for that date, then confirm the shares appear in your demat holdings after settlement.
NSE and BSE also run trade verification tools that confirm a trade in your name exists. If a broker executed trades you never placed, that is where the paper trail starts.
What should you do if the numbers do not match?
Raise a written complaint with the broker first, quoting the trade and settlement numbers, and keep the ticket reference. If the reply does not resolve it, escalate to the exchange investor grievance cell, then to SEBI’s SCORES platform. Both want the contract note attached, which is exactly why you keep them.
Mistakes beginners make
- Deleting the emails unread, then having no cost record at tax time.
- Comparing brokers on brokerage alone while ignoring STT, stamp duty and DP charges, which often dominate small trades.
- Expecting the executed price to match the screen price at order time. A market order fills at whatever the book offers, which is why choosing the right order type changes your realised price.
- Ignoring the average price on partially filled orders, then miscalculating profit.
Frequently Asked Questions
What is the password to open my contract note PDF?
Most brokers use your PAN in capital letters, and some use PAN combined with date of birth in DDMMYYYY format. The exact rule is stated in the email carrying the attachment and in your account opening documents. If neither works, ask support rather than guessing repeatedly, since some files lock after failed attempts.
Do I get a contract note if I only did an intraday trade?
Yes. Every executed trade generates an entry, whether delivery, intraday, futures or options. Intraday trades appear as a matched buy and sell on the same note, with STT charged at 0.025% on the sell leg only. If you traded and received nothing, contact your broker the same week.
Is a contract note proof of ownership of shares?
No. It proves a trade happened and what it cost. Ownership sits with the depository, so your demat holding statement or the consolidated account statement is the ownership record. Your depository participant maintains that account, while the broker only executes trades.
How long should I keep contract notes?
At least eight years. Non speculative business losses from F&O carry forward for eight years, and speculative intraday losses for four, so you may need to prove cost long after the trade. Download the PDFs to your own storage, since app access can end when you close the account.
Why does my contract note show a different price than my order price?
Because it records the executed price, not the requested one. Market orders take the best available price in the book, and a large order may fill across several price levels, giving you an average. A wide gap usually means thin liquidity or a fast moving market at that moment.
Key Takeaways
- The contract note is the digitally signed, legally valid record of your day’s trades, and no charge is legitimate unless it appears there or in the linked ledger.
- Brokerage differs between brokers; STT, stamp duty, exchange charges, SEBI fees and GST are identical for everyone.
- On a Rs 45,000 delivery buy, charges near Rs 77 mean about 0.35% of price movement is needed to break even on a round trip.
- Options STT is 0.15% on premium when sold, but on settlement value when exercised or assigned, making expiry in the money expensive.
- Verify the digital signature, SEBI registration number, client code and trade timestamps on your first few notes with any broker.
- Store every note for eight years, because carried forward losses and cost proof can be questioned years later.
