The day after your first trade, an email arrives with a PDF attached. It's password-protected, several pages long, and the numbers don't match what you thought you paid.
Most people open it once, feel mildly confused, and never look again. That's a mistake: the contract note is the only document that tells you exactly what happened to your money, and you'll need it at tax time and in any dispute.
Here's how to read one.
What a contract note actually is
A contract note is the official record of your trade. It must cover transactions executed for the client and be sent within 24 hours of execution.
It's not the same as the trade confirmation that pops up in the app. That confirmation only tells you the order went through. The contract note is the formal, digitally signed document that records the trade and serves as the official record.
Three reasons to care about it: it's your proof if a trade is disputed, it's the source document for calculating capital gains when you file your return, and it's the only place where every charge on the trade is itemised rather than netted into a single figure.
Electronic contract notes are now the norm and are legally valid. They usually arrive as a password-protected PDF. The password format can vary between brokers, so check what yours uses.
The format changed in 2024
Worth knowing: most explanations online still describe the old version.
Following a SEBI direction, an exchange circular dated 13 May 2024 revised the contract note format for all clients in the equity and derivatives segments. Two changes matter to you as a reader.
A single volume-weighted average price (WAP) across exchanges per security, not an ordinary arithmetic average. If your order was filled across both the NSE and the BSE, older contract notes showed each exchange separately. The revised format shows one combined average price across exchanges. In simple terms, it combines the different prices at which your order was filled into one average figure.
Combined exchange charges. The revised format shows the applicable exchange transaction charges as one combined figure instead of showing separate amounts for each exchange.
The result is a cleaner summary, but it gives you less detail at first glance. That is why the annexure is useful.
The revised format applies to equity and derivatives; offers for sale, buybacks, and the debt segment work differently.
Reading it, block by block
The header
This section shows your broker's name, SEBI registration number, exchange membership details and address, along with your client code, contract note number and trade date. Your client code is your unique identification number with the broker and can be useful if you raise a complaint.
The trade block
This section shows what you bought or sold, how many shares you traded, whether you bought or sold, the exchange where the trade happened, and the average price at which your order was executed. That average may not match the price you saw when you placed the order. If your two-hundred-share order was filled in four batches at slightly different prices, the contract note shows one combined average.
This is the single most common source of confusion, and it is not an error.
The charges block
This section lists the charges applied to your trade, including brokerage, securities transaction tax, exchange transaction charges, the SEBI turnover fee, stamp duty, GST and the investor protection levy. Our post on trading charges explains what each charge means; the contract note shows what was actually charged on your trade.
Two things to check here: brokerage should match what your broker advertises, and statutory charges should be consistent with the applicable published rates.
The net amount
This is what you actually paid or received. On a buy, it is higher than the value of the shares because charges are added. On a sell, it is lower because charges are deducted.
The annexure
This is the part most people never scroll to, and the most useful part of the document. Brokers must attach the trade-level detail: contract number, security, exchange, order number, order time, trade number, trade time, quantity, and price.
That means every individual fill is listed. If you want to know why your average price came out where it did, or exactly when your order executed, check the annexure.
How to check your contract note is right
Three quick checks, in order of how often they catch something.
Does the quantity match what you intended? Partial fills happen. If you ordered two hundred shares and got a hundred and fifty, the contract note reflects the hundred and fifty.
Does the average price look sensible? Compare it with the day's high and low for that security. If your average price is outside that range, something may be wrong.
Do the charges look right? Check whether the charges match the type and value of your trade. For example, STT on an equity delivery trade is linked to the value of the transaction.
You can also verify trades independently, because exchanges provide ways for investors to check trades executed in their name. It is worth knowing where to find this information.
If something is wrong
Raise it with your broker first, in writing, and include the contract note number and your client code.
If that doesn't resolve it, the complaint escalates to the exchange and then to SEBI, which runs an online dispute resolution mechanism for market complaints. Under SEBI's SCORES 2.0 grievance-redressal framework, the entity must respond to a complaint within twenty-one calendar days, with a further review window if the investor remains dissatisfied.
This is why it is important to keep your contract notes: they provide the record you can refer to if you need to raise a complaint.
Keep them for tax
When you sell an investment, your capital gain is broadly based on the sale value and the cost of buying it. Your contract note is an important record of those transactions. Brokers also provide summary statements, but the contract note gives you the underlying trade details.
Your broker also keeps copies of the contract notes it issues. Keeping your own copies is still useful, especially if you need them later.
Keep them filed by the financial year. It takes a minute at the time and saves an afternoon later.
How to download your contract note
Contract notes arrive by email as a password-protected PDF, usually the day after the trade. Most platforms also keep them in the app or web portal's reports or statements section, where you can download them individually or for a date range.
If you do not receive it within the prescribed period, contact your broker promptly and raise a written grievance if necessary. Issuing it is an obligation, not a courtesy.
The same section usually holds your other statements too: the profit and loss statement you need at tax time, and the holdings statement showing what you currently own. The profit and loss statement is a summary; the contract notes behind it are the evidence.
If you are just starting out
Open the next one that arrives and read it all the way through, including the annexure. It'll take five minutes, and you'll never need to do it slowly again.
Two things surprise people. The price on the note is an average and may not match what you saw on screen, and the net amount isn't the trade value; the charges sit between the two.
Neither is a mistake. Both are just how the document works.
Common questions
What is a contract note?
The legal record of a trade, issued by your broker in a format the exchange prescribes, and sent within 24 hours of execution.
How do I download my contract note?
From the reports or statements section of your broker's app or web portal, or from the email your broker sends after each trading day.
Why does the price on my contract note differ from the price I saw?
Because the note shows a weighted average price. If your order filled in several lots at slightly different prices, they blend into one figure.
How do I get a profit and loss statement?
From the same reports section. It summarises realised gains and losses across a period and is what most people use when filing returns.
How do I check my demat holdings?
Through your broker's app, or directly from the depository using CDSL easi or NSDL IDeAS, which show holdings from the depository's own records.
What if there is a mistake on my contract note?
Raise it with your broker in writing, quoting the contract note number and your client code. Brokers must redress complaints within twenty-one calendar days.
Risk disclosure
Hem Finlease Private Limited, SEBI Registration No. INZ000167734. Hem Securities Limited, SEBI Reg. No. IN-DP-568-2021, CDSL: 17700/17701.
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI and membership of recognised stock exchanges do not guarantee the performance of the intermediary or provide any assurance of returns to investors.
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