What a Contract Note Actually Is

A contract note is the official, legally required document your broker issues after every executed trade,
detailing the specifics of that transaction — essentially a receipt that serves as legal proof of the trade and the
associated charges. Reviewing it carefully, rather than filing it away unread, helps you verify that trades were
executed correctly and charges were applied as expected.

Trade Details: Price, Quantity, and Time

The contract note specifies the exact price at which your order was executed, the quantity traded, and the
precise time of execution — details worth cross-checking against your own order placement, particularly for orders
that may have been partially filled across multiple executions at slightly different prices within the same
session.

Understanding Brokerage Charges on the Note

Brokerage — the fee charged by your broker for executing the trade — is itemised on the contract note, and
verifying this matches your understanding of your broker’s fee structure helps catch any billing discrepancies
early, rather than discovering unexpected charges much later when reviewing overall account statements.

Securities Transaction Tax (STT) and Other Statutory Charges

Beyond brokerage, contract notes include various statutory charges — Securities Transaction Tax, exchange
transaction charges, SEBI turnover fees, GST on brokerage and other applicable charges, and stamp duty — each
mandated by regulation rather than set by your broker, and understanding what each represents helps you interpret
the full breakdown of costs associated with any given trade.

Net Amount Payable or Receivable

After accounting for the trade value and all associated charges, the contract note shows the final net amount
either payable by you (for a purchase) or receivable by you (for a sale) — this is the actual amount that will be
debited from or credited to your linked bank account as part of settlement.

Order Number and Trade Number Referencing

Each trade is assigned unique order and trade reference numbers, useful for tracking a specific transaction
across your broker’s platform and for any future queries or disputes regarding that specific trade, functioning
similarly to a transaction reference number in banking.

Settlement Date Information

The contract note typically indicates the settlement date — when the actual transfer of securities and funds is
expected to be completed — helping you understand when purchased shares will actually reflect in your demat account
or when sale proceeds will become available in your linked bank account.

Why Keeping Contract Notes Matters for Tax Filing

Contract notes, or the consolidated statements your broker provides summarising them, serve as important
supporting documentation when calculating capital gains or trading income for tax filing purposes, making it
worthwhile to maintain organised records rather than relying purely on memory or informal tracking when tax season
arrives.

Spotting Errors on a Contract Note

• Incorrect quantity or price that doesn’t match your order or platform confirmation
• Unexpected or unfamiliar charges not matching your understanding of the broker’s fee schedule
• Discrepancies between the contract note and your overall account statement

A Final Word on Reading Contract Notes

Taking a few minutes to actually read your contract notes, rather than treating them as routine paperwork,
builds a habit of verification that catches genuine errors early and gives you a clearer, more complete
understanding of the real costs involved in every trade you place.

Consolidated Account Statements as a Complementary Document

Beyond individual contract notes issued per trade, brokers also provide periodic consolidated account statements summarising all transactions, holdings, and charges over a defined period, offering a more convenient way to review overall trading activity and costs without needing to individually review every single contract note, particularly useful for active traders executing a large volume of trades who would otherwise face an unwieldy number of individual documents to review manually.

Cross-Verifying Contract Notes Against Your Trading Platform

Beyond simply reading the contract note in isolation, cross-verifying its details against your trading platform’s own order and trade history builds an additional layer of confidence that both records align, and any discrepancy between the two sources — however rare — deserves prompt follow-up with your broker, since resolving such issues becomes considerably harder the longer they go unaddressed after the actual trade date.