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How is the margin penalty calculated?

The penalty for not maintaining sufficient margins in the trading account is known as margin penalty. Exchanges require clients to maintain sufficient margins for the trades in their accounts and transfer funds if there’s a margin shortfall. Margin shortfall means that there’s a shortage of funds or margin in the trading account . To know more about 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., either in consecutive instances or in 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 penalty file is received from the exchange, 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”