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How is the margin penalty calculated?

The margin penalty is a fee charged when a trading account does not have enough funds to cover the required margin. Clients must maintain sufficient margins in their accounts for their trades and transfer additional funds if there is a margin shortfall, which occurs when there is insufficient funds or margin in the account. To learn more about the margin penalty, see What is a margin penalty, and why is it charged?

The penalty levied in the case of a shortfall can be:

Shortfall collection for each client Penalty percentage of the shortfall
(< ₹1 lakh) And (< 10% of applicable margin) 0.5%
(>= ₹1 lakh) Or (>= 10% of applicable margin) 1.0%
  • If the margin shortfall continues for more than 3 consecutive days, a penalty of 5% is applied for each subsequent instance of the margin shortfall.
  • If there are more than 5 instances of shortfall in a calendar month, a penalty of 5% for every further instance of the shortfall.
  • For MCX, if the margin shortfall is reported 3 times or more during a month, i.e., in consecutive instances or 3 different instances, the penalty would be 5% from the 4th instance of the shortfall.

GST at 18% is levied on the penalty amount.

Learn more about margin penalties by visiting NSE (WEB) and MCX (WEB).

If a margin penalty is incurred, the due date for reporting margins to the exchange is T+5 days. Zerodha posts the entry on the funds statement once the exchange receives the penalty file, i.e., on T+6 day. It is posted in the statement on Console with the narration "{segment}} short-margin penalty (non-upfront) for date yyyy-mm-dd”