What is Contract Note? Why Every Trader Must Check Their Contract Note
A contract note is an official document issued by your broker at the end of each trading day confirming the details of every trade you executed that day. It is a legally binding confirmation that includes the stock name, quantity, price, exchange, time of trade, brokerage, and all applicable charges like STT, exchange fees, and GST.
Think of the contract note as your daily shopping bill from the stock market. It itemises exactly what you bought and sold, how much you paid, and what fees were deducted. It is the most important document for verifying your trades and for tax purposes.
What does a contract note contain?
| Section | Information Included |
|---|---|
| Trade details | Stock name, BSE/NSE, buy/sell, quantity, price, time |
| Settlement info | Settlement number, settlement date |
| Brokerage | Brokerage charged per trade |
| Statutory charges | STT, exchange transaction charges, SEBI turnover fees |
| Taxes | GST on brokerage and charges, stamp duty |
| Net amount | Total payable or receivable after all charges |
Why must you check your contract note?
The contract note is your proof of trade. If there is ever a dispute about a trade, the contract note is the legal evidence. Checking it daily ensures that the trades executed match what you intended, the prices are correct, and the charges are as per your brokerage agreement.
Your broker is legally required to send the contract note to your registered email by the end of the trading day. If you do not receive it, contact your broker. Not sending contract notes is a regulatory violation.
Investments in securities market are subject to market risks. This article is for educational purposes only.
Frequently Asked Questions
I did not receive a contract note for today's trades. What should I do?
Contact your broker immediately. SEBI requires brokers to issue contract notes for every trading day. Check your spam folder first. If it is not there, ask the broker to resend it. Persistent non-issuance of contract notes is a serious regulatory concern and can be reported to the exchange or SEBI.
Can I use the contract note for tax filing?
Yes. The contract note contains all trade details needed for computing capital gains and losses. Your CA uses the buy and sell prices, dates, and charges from contract notes to calculate your tax liability. Keep all contract notes organised by financial year for at least 7 years.
What if the price on the contract note is different from what I expected?
This can happen due to slippage on market orders or partial fills at different prices. Verify the execution details in your trade book. If the contract note price does not match the trade book, contact your broker for clarification. Genuine discrepancies must be reported and resolved by the broker.
Is a digital contract note legally valid?
Yes. SEBI accepts digitally signed contract notes sent via email as legally valid documents. Most brokers now send only digital contract notes. You can request physical copies if needed, though this is uncommon today.
How long should I keep my contract notes?
Keep contract notes for a minimum of 5 to 7 years. Tax authorities can ask for supporting documents during assessments, and contract notes are primary evidence for your trading transactions. Digital storage makes this easy since the files are small and can be organised in folders by date.
Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice.
Indira Securities Pvt. Ltd. | SEBI Reg. No.: INZ000031633 (Stock Broker) | IN-DP-431-2019 (DP) | NSE | BSE | MCX | Indira Commodities Pvt. Ltd. - MCX: 46025 | NSE: 50001 | SEBI Reg. No.: INZ000038238 | #153/154, 4th Cross, Dollars Colony, J.P Nagar 4th Phase, Bengaluru - 560078 | [email protected] | [email protected]
