Delayed payment charges appear on your funds statement when your Zerodha account is negative or when you exceed margin requirements. Zerodha levies these charges for three main reasons.
Negative balance in your Zerodha account
You will see delayed payment charges when your account shows a negative balance:
- If your utilised funds exceed your available balance, your account results in a debit balance
- This can also happen when Zerodha debits charges without you having sufficient funds
- Zerodha charges interest at 0.05% per day (₹50 per lakh) or 18% per annum on your debit balance
- GST does not apply to this interest charge
Over-utilisation of non-cash equivalent collateral margin
For F&O positions, you must maintain 50% of the margin in cash or cash-equivalent collateral, while you can hold the remaining 50% in non-cash collateral:
- If you do not maintain sufficient cash margins, Zerodha funds your shortfall
- Zerodha will levy interest of 0.035% per day (₹35 per lakh) or 12.775% per annum on your shortfall
- Zerodha applies 18% GST on this charge
Margin shortfall
SEBI requires brokers to collect margins from you before executing orders to cover potential losses. A margin shortfall occurs when your available margin (funds or collateral) is less than the required margin set by SEBI.
Factors affecting your required margins include:
- Liquidity
- Volatility
- Time to expiry for futures and options contracts
- Other positions in your portfolio
Zerodha charges interest at 0.035% per day (₹35 per lakh) or 12.775% per annum, with 18% GST applied to this charge.
How charges appear on your funds statement
To comply with GST regulations, Zerodha splits the charges as follows:
- Debit balance interest: Appears as 'Delayed payment charges' and GST does not apply.
- Excess collateral utilisation and margin shortfall interest: Appear as a separate entry on your funds statement as Charge for excess collateral utilisation and margin shortfall' and attracts 18% GST.
When charges do not apply
Zerodha does not levy delayed payment charges when your margins increase during the day due to factors such as volatility or market events. However, if your margins increase because of a hedge break, which involves the expiry or exiting of one leg of your hedged position, delayed payment charges will apply if you do not maintain sufficient funds.
How to avoid these charges
To avoid delayed payment charges, ensure you maintain sufficient funds in your Zerodha account. You can also check the interest levied on your debit balance on the interest statement on Console.