Revision: Financial Mathematics Business Mathematics and Statistics HSC Commerce Class 11 Tamil Nadu Board of Secondary Education

GST (Goods and Services Tax) is charged on the brokerage amount.

• In most school-level examples, GST on brokerage is taken as 18%.

• GST is calculated on the brokerage, not directly on the market value of shares.

Brokerage is the amount charged by a registered share broker for buying or selling shares on behalf of an investor.
Brokerage is always calculated on the Market Value (MV) of shares.

Brokerage

\[ \text{Brokerage} = \frac{\text{Rate of brokerage}}{100} \times \text{Market Value} \]

Buying Price

When shares are purchased, brokerage is added to the market value.

\[ \text{Buying Price} = \text{Market Value} + \text{Brokerage} \]

If GST on brokerage is included:

\[ \text{Total Purchase Cost} = \text{Market Value} + \text{Brokerage} + \text{GST on Brokerage} \]

Selling Price

When shares are sold, brokerage is deducted from the market value.

\[ \text{Selling Price} = \text{Market Value} - \text{Brokerage} \]

If GST on brokerage is included:

\[ \text{Net Sale Proceeds} = \text{Market Value} - \text{Brokerage} - \text{GST on Brokerage} \]

Total Brokerage

\[ \text{Total Brokerage} = \text{Brokerage per share} \times \text{Number of shares} \]

GST on Brokerage

\[ \text{GST} = \frac{18}{100} \times \text{Brokerage} \]

Profit or Loss

\[ \text{Profit or Loss} = \text{Net Sale Proceeds} - \text{Total Purchase Cost} \]

If the result is positive, there is a profit.

If the result is negative, there is a loss.

• Market Value (MV): Current buying or selling price of a share.
• Brokerage: Broker's commission, calculated on market value.
• Buying cost: \[ MV + \text{Brokerage} + \text{GST on brokerage}. \]
• Net selling amount: \[ MV - \text{Brokerage} - \text{GST on brokerage}. \]
• GST on brokerage: Usually \[ 18\%. \]
• Profit/Loss: Net sale proceeds plus dividend minus total purchase cost.
• Dividend: Usually calculated on face value.