What does 'Delayed payment charges' entry on the funds statement mean?

Delayed payment charges are levied for the following reasons

Negative balance in the Zerodha account

• If utilised funds exceed the available balance in the Zerodha account, it results in a debit balance.
• This can also happen when charges are debited without sufficient funds.
• Interest is charged at 0.05% per day (₹50 per lakh) or 18% per annum on the debit balance. GST is not applicable to this interest charge.

Over-utilisation of non-cash equivalent collateral margin

• For F&O positions, 50% of the margin must be maintained in cash or cash-equivalent collateral, while the remaining 50% can be in non-cash collateral.
• If sufficient cash margin is not maintained, Zerodha funds the shortfall. Interest of 0.035% per day (₹35 per lakh) or 12.775% per annum will be levied on the shortfall, with 18% GST levied on this charge.
  

Margin shortfall

• SEBI requires brokers to collect margins from clients before executing orders to cover potential losses. A margin shortfall occurs when the available margin (funds or collateral) is less than the required margin set by SEBI. To learn more, see Margin shortfall and why they occur.
• Factors affecting required margins include liquidity, volatility, time to expiry for futures and options contracts, and other positions in the portfolio.
• Interest is charged at 0.035% per day (₹35 per lakh) or 12.775% per annum, with 18% GST levied on this charge.
  

To comply with GST regulations, the charges are split as follows:

• Debit balance interest is posted as Delayed payment charges, and GST is not applicable.
• Excess collateral utilisation and margin shortfall interest appear as a separate entry on the funds statement as Charge for excess collateral utilisation and margin shortfall, and this attracts 18% GST.

Delayed payment charges are not levied when margins increase during the day due to factors such as volatility or market events. However, if margins increase because of a hedge break, which involves the expiry or exiting of one leg of a hedged position, delayed payment charges will be applicable if sufficient funds are not maintained.

To avoid delayed payment charges, ensure sufficient funds are available in the Zerodha account. The interest levied on the debit balance can also be checked on the interest statement on Console.