You buy shares worth ₹5,000 through your trading app. Later, you notice that the amount deducted from your trading account is slightly higher.
Where did the extra money go? Was it brokerage, tax or another charge?
Your contract note helps you understand the answer.
The name may sound technical, but the idea is simple. It is a document that records your completed trades and shows the related trading charges.
Let us understand how to read it without getting lost in complicated terms.
What Is a Contract Note?
A contract note is an official document issued by your stock broker to confirm trades carried out through your account.
It records details such as:
- What you bought or sold.
- How many shares or units you traded.
- The price at which the trades happened.
- The brokerage and applicable taxes.
- The amount payable or receivable for those transactions.
Think about buying something from a shop. Your receipt shows the items, quantity, price and total bill.
A contract note plays a similar role for your stock market trades. It is also an important record if you need to question a transaction or resolve a difference with your broker.
A Simple Example of a Contract Note
Suppose you buy 20 shares of ABC Limited at ₹250 each.
The purchase value is:
20 × ₹250 = ₹5,000
However, ₹5,000 may not be the full cost of the transaction. Brokerage and applicable taxes can add to it.
Your contract note helps you see the trade value and those additional charges separately.
This makes it easier to answer two questions:
“Did my trade happen correctly?”
“How much did the transaction cost?”
When Will You Receive Your Contract Note?
Your broker must issue a contract note within 24 hours of trade execution. Brokers commonly send electronic contract notes to your registered email address.
You may also be able to download them from the reports or statements section of your broker’s website or app.
A contract note records completed trades. An order that remains unexecuted, or is cancelled before execution, does not become a completed transaction.
For example, you may place an order to buy a share at ₹100. If the market price never reaches your order price and no shares are bought, there is no executed purchase to record.
How to Read a Contract Note
You do not need to understand every number on the first attempt. Start with the details that matter most.
1. Check Your Account Details
Make sure the client name and client code belong to you.
The client code is the reference your broker uses to identify your trading account.
2. Check the Trade Date
The trade date is the day your transaction was executed.
Match it with the day you bought or sold the shares.
3. Check the Share Name and Transaction Type
Confirm that the correct share or instrument appears.
Next, check whether it is marked as a buy or sell.
This is a basic check, but it matters. A purchase and a sale create different obligations in your account.
4. Check the Quantity and Price
Compare the quantity and execution price with the completed trades shown in your trading app.
Remember that the execution price is the price at which your order actually traded. It may differ from the price you saw before placing a market order.
5. Review the Charges and Final Amount
Once the trade details match, look at the brokerage, taxes and final amount.
The document may contain a summary followed by detailed trade information in an annexure, which simply means an attached section. Check those pages too.
Buying Shares: How the Final Amount Is Calculated
Imagine you buy shares worth ₹5,000.
For this example, assume the total trading charges are ₹10.
| Particulars | Amount |
|---|---|
| Purchase value | ₹5,000 |
| Assumed trading charges | ₹10 |
| Total payable | ₹5,010 |
Here, payable means the amount you owe for the purchase and the charges shown.
If you already have sufficient money in your trading account, your broker normally adjusts the amount against that balance.
The charge amounts used in this article are only examples. They are not actual brokerage or tax calculations.
Selling Shares: How Much Will You Receive?
Suppose you later sell the shares for ₹5,500.
Assume the trading charges shown for the sale are ₹12.
| Particulars | Amount |
|---|---|
| Sale value | ₹5,500 |
| Assumed trading charges | ₹12 |
| Net receivable | ₹5,488 |
Here, receivable means the amount due to you for the transactions shown.
Before charges, the difference between your purchase and sale values is ₹500.
After the assumed buying and selling charges:
₹500 − ₹10 − ₹12 = ₹478
Any account expenses recorded separately would also need to be considered. This example does not calculate income tax.
Also, an amount shown as receivable does not automatically mean it is available for immediate withdrawal. Check the withdrawable balance in your trading account.
What Are the Charges on a Contract Note?
You may see several charge names. Each has a different purpose.
| Charge | Easy explanation |
|---|---|
| Brokerage | The fee your broker charges for executing a trade |
| STT | Securities Transaction Tax on applicable securities transactions |
| Exchange transaction charges | Charges connected with trading on the exchange |
| SEBI turnover fee | A regulatory fee based on trading turnover |
| GST | Tax on applicable service charges |
| Stamp duty | A levy applicable to relevant purchases |
The charges depend on the trading segment, transaction type, broker’s pricing plan and applicable rules.
One important point is that zero brokerage does not always mean zero trading cost. Other applicable charges may still be payable.
Does a Contract Note Show Every Account Expense?
No. Some expenses may appear separately in your broker’s ledger or funds statement.
Depending on the broker, these can include DP charges, account maintenance charges, funding interest or certain service charges.
That is why you should use both documents:
- The contract note to understand your completed trades and related trading charges.
- The ledger or funds statement to understand money moving into and out of your trading account.
If your account balance changes by more than you expected, checking only the contract note may not explain the full difference.
Why Does the Contract Note Show an Average Price?
Your order may be completed in parts at different prices.
Suppose you place an order to buy 10 shares:
| Quantity | Execution price | Value |
|---|---|---|
| 4 shares | ₹100 | ₹400 |
| 6 shares | ₹102 | ₹612 |
| 10 shares | ₹1,012 |
Your average purchase price is:
₹1,012 ÷ 10 = ₹101.20 per share
This is called the weighted average price, or WAP.
It considers both the price and the number of shares bought at each price. Your contract note may show this average in its summary, with individual executions listed separately.
Contract Note, Trade Book and Ledger: What Is the Difference?
These records are connected, but they answer different questions.
| Record | Main purpose |
|---|---|
| Order book | Shows orders placed and their status |
| Trade book | Shows transactions actually executed |
| Contract note | Officially confirms trades and related trading charges |
| Ledger or funds statement | Shows money credited to and debited from the trading account |
| Demat statement | Shows securities held and movements in the demat account |
For example, an order book may show a cancelled order. Since it was not executed, it will not appear as a completed trade in your contract note.
What Should You Do If You Find a Mistake?
Start by comparing the contract note with your trade book.
Check the share name, quantity, buy or sell direction, execution price and brokerage plan.
If something still looks wrong, contact your broker promptly. Mention the trade date, contract note number and the relevant order or trade number.
Explain the difference clearly. For example:
“My trade book shows a purchase of 10 shares, but the contract note appears to show a different quantity. Please check and explain.”
Keep a copy of your complaint and the broker’s response. If the issue remains unresolved, follow the relevant exchange’s investor grievance process.
Frequently Asked Questions About Contract Notes
Is a contract note proof that I own the shares?
It confirms that a trade happened. To check whether the shares have been credited and are held in your demat account, review your demat holdings or statement after settlement.
Will I receive a contract note if I only place an order?
An order must be executed to become a trade. An order cancelled before execution does not create a completed transaction.
Does a contract note show my final profit or loss?
Not necessarily. A sale contract note alone may not show your earlier purchase cost or separately recorded expenses. You may need your purchase records, profit-and-loss report and ledger.
Should I save my contract notes?
Yes. Keep them with your other trading records so you can check past transactions, review charges and support any query about a trade.
What is the easiest way to check a contract note?
Start with five things: the share name, buy or sell direction, quantity, price and charges. Once these match your completed trades, the document becomes much easier to understand.
