SEBI turnover fees
Also written Turnover fees
SEBI's fee on the total turnover a broker clocks on the exchange, charged at Rs 15 per Rs 1 crore for most commodities but reduced to Rs 1 per crore for agricultural commodities to support farmer participation.
In plain language
SEBI does not fund itself from the Government budget. Part of its running cost is recovered from the market itself, as a small fee on trading turnover.
This fee is charged on brokers, based on the total value of business they do, and it is collected on SEBI's behalf by the exchanges. Because agricultural commodities matter for farmer participation specifically, SEBI charges a much smaller fee on turnover in that segment, and even directs where the money it gives up goes.
How it works
The standard rate is Rs 15 per Rs 1 crore of turnover, which the workbook also expresses as 0.00015 per cent. For agricultural commodities, this is reduced to Rs 1 per crore — a tenth of the general rate.
The reduction is not a simple discount left unaccounted for. SEBI has mandated that exchanges dealing in agricultural commodity derivatives create a separate fund earmarked for farmers and FPOs, into which the regulatory fee forgone by this reduction is deposited. Income earned on investing this fund is also ploughed back into it. The fund can be used for a range of purposes for farmers and FPOs participating in the market, from broker fees to warehousing charges, under SEBI's framework issued on 20 March 2019.
A worked example
A broker clocks Rs 200 crore of turnover in a month trading non-agricultural commodities such as gold and copper on behalf of clients.
SEBI turnover fee = Rs 200 crore x (Rs 15 / Rs 1 crore) = Rs 3,000 for the month.
A second broker clocks the same Rs 200 crore of turnover, but entirely in agricultural commodities such as guar seed and cotton.
SEBI turnover fee = Rs 200 crore x (Rs 1 / Rs 1 crore) = Rs 200 for the month — a fee that is one-tenth of the first broker's, with the Rs 2,800 difference effectively redirected, through the exchange's earmarked fund mechanism, toward the benefit of farmers and FPOs trading agri commodity derivatives.
Why NISM asks about it
Chapter 9 (Accounting and Taxation), section 9.4.3, "SEBI Turnover Fees," placed right after the Commodities Transaction Tax section and just before the section on the Farmer and FPO fund it feeds. Expect a rate-recall question — Rs 15 per crore generally, Rs 1 per crore for agri commodities — and a question linking the forgone fee to the earmarked farmer/FPO fund.
Common exam traps
- The reduced rate applies to agricultural commodities specifically, not to small brokers or small trades generally.
- The fee is charged on turnover, collected by exchanges on SEBI's behalf — it is not something SEBI collects from brokers directly.
- The forgone revenue on agri turnover is not simply waived — it is redirected into a dedicated fund for farmers and FPOs, which is the link candidates most often miss.
- The rate on this page is the commodity derivatives rate. SEBI sets this fee segment by segment, so there is a separate page for the interest rate derivatives fee, where Series IV's workbook gives a different figure and adds a flat yearly fee for clearing members. Answer from the rate your own paper teaches.
Check yourself
1.Which of the following commodity derivatives is EXEMPT from Commodities Transaction Tax?
- a)Sugar
- b)Guar gum
- c)Unprocessed agricultural commodities
- d)Soya oil
Show the answer
Answer: (c) Unprocessed agricultural commodities
The three named distractors are not random — sugar, guar gum and soya oil are precisely the three examples the workbook gives of processed agricultural products that do attract CTT. Their unprocessed counterparts — sugarcane, guar seed, soyabean — would be exempt.
The distinction is the whole point of the exemption. It is aimed at keeping the cost of hedging low for farmers and primary producers, who deal in the raw crop, while taxing the processed and industrial end of the market where trading is more speculative.
The same policy logic appears in SEBI turnover fees: Rs 15 per crore generally, "REDUCED TO Rs 1 PER CRORE IN THE CASE OF AGRICULTURAL COMMODITIES" — and the fee forgone must be paid into "a SEPARATE FUND EARMARKED FOR THE BENEFIT OF FARMERS/FPOs."
The scope of CTT overall: "applicable on transactions of COMMODITY FUTURES AND ON TRANSACTIONS OF OPTIONS ON UNDERLYING COMMODITIES WHICH ARE NOT EXEMPTED AGRICULTURAL COMMODITIES."
Where this is taught
Free preparation for NISM Series XVIRelated terms
- SEBI turnover feeSEBI's own fee on Interest Rate Derivatives trading turnover — currently Rs 5 per crore, plus a flat Rs 50,000 yearly fee for a clearing or self-clearing member for as long as its registration stays in force.
- Commodity Transaction TaxA transaction tax on non-agricultural commodity derivatives — 0.01% on the sale of a futures contract, paid by the seller, with separate rates for options.
- Farmer and FPO fundA dedicated exchange fund, credited with the SEBI turnover fee forgone on agri-commodity derivatives, used exclusively to help farmers and FPOs participate in that market.
- Goods and Services TaxA destination-based tax on consumption, levied at every stage from manufacture to final consumption, with credit for tax paid at earlier stages available as setoff so that only value addition is taxed.
- Uniform stamp duty regimeSince 1 July 2020, exchanges — not brokers — collect stamp duty on commodity derivatives trades and remit it to the buyer's state, at a uniform rate of about Rs 2 per Rs 1 lakh.