Zero brokerage sounds simple: you pay no brokerage on equity delivery trades. But that does not mean the trade is cost-free.
Nobody misled them. Delivery brokerage really was zero. The money went somewhere else, on lines they had not thought to look at, and the gap between what was advertised and what was charged is entirely explained by reading the tariff sheet, which nobody does.
This is about where the money actually comes from, and why that matters more than the headline rate.
Zero brokerage is real, and it is narrow
Let us be fair to the model before examining it.
The shift to flat and zero pricing genuinely reduced costs for Indian investors, and the reduction was large. Before it arrived, even discount brokers charged a percentage, and buying shares carried a fee that scaled with the size of your purchase. A long-term investor buying steadily paid meaningfully more than they do now.
What zero brokerage means, precisely, is zero brokerage on equity delivery. That is one charge on one type of trade.
Everything else continues. Securities transaction tax, stamp duty, exchange transaction charges, the regulatory fee and GST are all statutory or exchange-set and identical at every broker. Depository charges apply when you sell. Annual maintenance may apply to the account.
On a delivery round trip, brokerage is only one of several charges, and securities transaction tax alone is 0.1% on each side. Removing brokerage is a real saving, though not the whole cost.
So where does the money come from?
A brokerage business has costs, and if you are not paying on delivery trades, something else is funding it. There are five main lines, and knowing them tells you something more useful than any price comparison.
Derivatives brokerage. The flat per-order charge on futures, options, intraday and commodities. For most discount brokers this has been the single largest source of revenue by a wide margin. Delivery is free; the trading that generates fees is everything else.
Interest on money lent to you. Margin trading facilities let you buy shares with borrowed money, at rates that can vary significantly across brokers and products. This is the fastest growing line in Indian broking and it is worth understanding why, which we come to below.
Depository charges on selling. Charged per company per day whenever you sell, regardless of quantity. The depository charges the broker a few rupees; what you are charged is set by the broker and the difference is margin.
Float on idle money. Money sitting unused in your trading account can be deployed by the broker. Regulation has narrowed this considerably, since brokers must now pass client funds up to the clearing corporation daily and return unused balances periodically, but it has not disappeared.
Distribution and premium tiers. Commissions on products sold alongside broking, subscription plans, priority access, data and interface products.
The line that changed everything
Here is what makes this a live subject rather than a static one.
The single biggest revenue line for discount brokers was derivatives, and the regulator spent 2024 and 2025 deliberately shrinking it. Contract sizes were tripled, weekly expiries cut to one per exchange, margins raised, and securities transaction tax on derivatives increased again in April 2026.
It worked, though not in the way the headlines suggested. The number of individual participants in the segment fell sharply through FY25, from about 61 lakh in the first quarter to about 43 lakh in the last, with the sharpest decline among the smallest accounts. SEBI's own comparison for December 2024 to May 2025 shows unique individual traders down about 20% year on year and individual premium turnover down about 11%. The segment did not collapse. It stopped growing, from an elevated base, and shed a large number of small participants.
For a business earning a flat fee per order, that combination is the difficult one. Revenue depends on the number of orders, and far fewer participants placing them is a direct hit regardless of what happened to notional turnover. Active client counts at some discount brokers have also declined.
So one area where brokers have been expanding revenue is lending through margin trading facilities. Margin trading facilities have been launched, expanded and promoted heavily across the sector in the past two years, because interest income is steadier than trading fees and far less exposed to the next regulatory change.
Why the source of revenue matters to you
This is the part worth carrying away, and it is not an accusation against anyone.
Every business is shaped by how it earns. That is not a moral failing, it is simply how businesses work, and the useful question for a customer is always the same: what does this company need me to do in order for it to make money?
A business earning per trade needs you to trade. A business earning interest on borrowed money needs you to borrow. A business earning commission on products needs you to buy products. A business charging a subscription needs you to keep the subscription and is largely indifferent to your activity.
None of these makes a broker dishonest. These revenue models can influence which products and features a platform chooses to promote.
When a platform is free at the point of use, the honest question is not whether it is a trick. It is which of your behaviours it is designed to encourage, and whether that behaviour is one you would have chosen anyway.
What to actually compare
If you are choosing between brokers, four numbers matter more than the headline.
Depository charges on selling. A real per-transaction cost that varies widely and is easy to overlook because it appears only when you sell.
Annual maintenance. Recurring, small, and payable whether or not you trade. Worth checking whether you qualify for a Basic Services Demat Account (BSDA). Under the SEBI slab effective 1 September 2024, AMC is nil up to ₹4 lakh and capped at ₹100 where holdings exceed ₹4 lakh but are up to ₹10 lakh. From 31 March 2026, specified valuation exclusions and quarterly eligibility reassessment apply.
Refer SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2024/91 dated 28 June 2024 and SEBI Circular HO/38/11/11(3)2025-MIRSD-POD/I/1101/2025 dated 24 December 2025.
Charges on what you actually do. If you only buy and hold, derivatives pricing is irrelevant to you. If you trade intraday, the flat per-order charge matters far more than free delivery.
Interest rates on borrowed money, if you ever intend to borrow. This is now a headline product across the industry and rates differ substantially.
If you are just starting out
Zero brokerage on delivery is a genuine benefit, particularly if you buy and hold shares. The saving is real, and for someone buying and holding it removes a cost that used to scale with every purchase.
Just do not read free as costless. Read the tariff sheet once, look for the depository charge and the maintenance fee, and understand that a company offering something at no charge still needs another way to generate revenue.
That plan is usually disclosed, usually legitimate, and usually visible on the same screen you are ignoring.
Common questions
Is zero brokerage really free?
Delivery brokerage is genuinely zero at brokers offering it. Statutory charges, exchange charges, GST, depository charges on selling and any maintenance fee all still apply.
How do zero brokerage brokers make money?
Mainly through per-order charges on derivatives, intraday and commodities, interest on money lent through margin facilities, depository charges, float on idle balances, and distribution or subscription products.
Is a discount broker cheaper than a full service broker?
For most self-directed investors, yes, on explicit charges. A full service broker charges more and provides research, advice and relationship support. Whether that is worth the difference depends on whether you use it.
What are DP charges and why do they exist?
Depository charges apply when shares leave your demat account on a sale, per company per day. The depository charges your broker a few rupees; what the broker charges you is their own decision.
Why are brokers promoting margin trading so heavily?
Because regulatory changes substantially reduced derivatives activity, which was their largest revenue source, and interest income is steadier and less exposed to further change.
Does zero brokerage mean poor service?
Not necessarily. It means the service is funded differently. Judge platform reliability, support quality and transparency of charges directly rather than inferring them from price.
The short version
Zero brokerage is real, applies to one charge on one kind of trade, and genuinely saved Indian investors money.
The useful question is not whether free is a trick. It is what a free service needs you to do in order to be worth running, and whether that is something you were going to do anyway.
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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