You must have been receiving a contract note from Groww every time you execute an order through our app or portal. Before you trash it as just a bill for your purchase, hold on; it actually holds much importance.
A contract note is the legal document that presents the summary of all the trades executed during the trading day. The one that Groww sends you contains details of trades executed by Groww on your behalf on both of the stock exchanges, i.e., NSE and BSE, for equity and derivative investments.
Traders can view their transactions, time, trade, profit, loss summary, charges, taxes summary, and much more from this one piece of document. A contract note is your legal shield from fraud and provides you with every sort of information you need about your trades.
At first, a contract note may appear as a complex document; however, it’s relatively simple to interpret. Let us help you break it down.
Before we get around to what is contract note, note that when you try to open the contract note delivered to you by email, you will need a password.
The document is password-protected to trade in stocks or derivatives – Groww, or others. Given the sensitive nature of this document, it makes sense to protect it with a password.
For Groww, the password is always your complete PAN in capital letters.
Here’s an example of how a typical contract note in stock market looks like:
Order No.: For each successfully executed order, a unique order number is assigned by the exchange. This number will be different for each of the orders you execute on the platform.
Order Time: in the second column, you can find the exact time when your order was placed on the exchange.
Trade Time: here, you will get to know the exact time when the order was ‘executed’ on the exchange. Order time and trade time can vary. For example, a limit order will only get executed when the underlying conditions for the order are met.
Security/Contract Description: find the name of the stock you traded.
Buy(B)/Sell(S): Stocks you bought will be represented by ‘B,’ and stocks sold will be represented by ‘S’ indicating the type of trade and transaction undertaken.
Quantity: This represents the number of securities (in case of stocks) or number of lots traded (in case of derivatives). For sell orders, quantities will be represented in negative.
Gross Rate/Unit: here, you will find the price at which your order was executed. That is, the column represents orders that are executed at the market price of the stock.
For more details, head to: Pricing
Net Rate/Unit: This is usually the same as gross rate/unit. In case of brought forward, carry forward futures transactions and expired options contracts, there is only net rate/unit.
Closing Rate/Unit: This is available only for futures contracts. It represents the price at which the futures contracts you chose to trade closed at the end of the market session. The contract note will show this value, as futures contract’s MTM settlement is on a daily basis.
Net Total Before Levies: This column details the amount you need to pay or are liable to receive for all the trades you undertook in your Demat through the broker. However, this figure does not take into account the statutory fees such as brokerage and taxes that are charged separately.
If this amount is negative, you will have to pay this amount to Groww as it’s due from your side. Should this amount be positive, Groww will pay it to you. It will be credited to your trading account.
Beneath this vertical table, you will find a horizontal row containing the description of your buy and sell quantities. Your buy summary is generally on the left side while the sell summary appears on the right.
The second half of the contract note covers all the monetary aspects, including net payable/receivable, taxes, brokerage, and STT.
Pay in/Payout Obligation: The amount indicated here will show debit and credit transactions. Note that, in case of debit, the transaction is denoted with a negative sign.
The next row is for brokerage, charged by Groww for executing your trades at the exchange. You already know Groww charges a flat Rs 20 or 0.05% per executed order, whichever is lower on equity transactions, and a flat Rs 20 per executed order on F&O trades through the platform. So this row simply calculates the total brokerage due on the trades you have executed in the day.
The row after that accounts for regulatory fees, Stamp Duty, SEBI turnover fee, and Exchange Transaction Tax.
In the next row, you will find the details of GST, i.e., IGST, or CGST and SGST.
Note that since Groww is registered in Karnataka, you will be charged CGST and SGST as applicable if you’re from Karnataka. If you’re from any other state, a respective IGST will be levied. For all states except Karnataka, IGST is levied, and CGST and SGST are only applicable in Karnataka.
Finally, there is a row for “Net amount payable/receivable by the client.”
Here too, in the case of debit transactions, the amount is denoted with a negative sign. Debit indicates the amount payable by you (the client), while credit is the amount receivable by you.
Note here that a contract note doesn’t contain the details of DP charges and margin details; for DP charges, clients need to refer to their ledger statement.
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Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.