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Contract Note – Definition, Information contained, Importance

Written by - Akshatha Sajumon

April 10, 2023 6 minutes

Stock market investors would have come across the term ‘Contract notes’ during their course of investment. It is one of the most important legal documents that every stock market investor should have, as it records all transactions and associated profit-and-loss information. Here, we will discuss everything that a stock market investor should know about contract notes.

Definition of contract note

A contract note is an accounting record of all successful trades on a trading day. It acts as a legal proof of an individual’s stock market transactions. It is sent to an investor/trader by the broker, mostly in an electronic format containing a digital signature.

It contains:

  1. Information on any trade made by a stockbroker on a stock market on a given day
  2. Confirmation of a trade execution done on a stock exchange on a client’s behalf 
  3. Information relating to the shares bought or sold

What information is contained in a contract note?

Every contract note comprises the following set of information:

1. Order & trade number

Every order that has been executed successfully will be assigned a unique order number by the stock exchange. Each executed order has a different number on the platform. 

2. Order and trade time

Order time is the precise time when an investor has placed an order on the exchange. This is different from the trade time. Trade time is when an order is ‘executed’ on the exchange. 

3. Securities description

This section contains the name of the stock or contract that is traded.

4. Buy or sell action

This section tells the type of order placed by an investor, whether buy or sell. 

  1. Stocks bought by an investor/trader are represented as ‘B’. 
  2. Stocks sold by an individual/trader are represented as ‘S’.

5. Quantity and price of trade

Quantity is the number of securities traded or lots traded. Buy orders are mentioned in positives and sell order quantities are represented in negative. The price of trade is represented as below:

  • Gross rate per unit: This is the price at which an order is executed on the stock exchange.
  • Net rate per unit: This amount will mostly be the same as Gross Rate per unit if brokerage is separately mentioned.
  • Brokerage per unit: This is the cost charged for each trade and is mentioned order-wise in the contract note.
  • Closing rate per unit: This price is applicable only to Derivative Trades. It is the price at which a contract has been closed on a trading day.

6. Net amount receivable or payable

This is the total amount receivable or payable for a transaction before any other charges are added.

  1. Positive amount indicates amount receivable.
  2. Negative amount indicates amount payable.

In this section, the 1st table contains comprehensive information while the second table has order-wise details. The second table provides a basic summary of trades, including brokerage.

7. Pay In/Pay Out Obligation:

This section contains an amount that is indicative of debit and credit transactions. Debit transactions are shown with a negative sign and credit transactions are positive numbers.

Pay in/pay out obligations also contain brokerage to be paid to the broker, regulatory fees, stamp duty, and exchange transaction tax. 

Details such as GST, including IGST, or CGST and SGST are included here. 

  1. IGST is charged @ 18% 
  2. CGST and SGST is calculated @ 9% each

At the end of this section, one can find the “Net amount payable/receivable by the client.”

8. Securities transaction tax (STT):

This section has information on the direct tax applicable on each trade executed on the Exchange. STT is applied on buying as well as selling of equity shares, for delivery, intraday and F&O. The broker would collect this tax to pay it to the Exchange. 

What is the significance of a contract note?

Since the investor base across most major stock markets in India is growing quickly, the scope of different fraudulent transactions and conflict of interest may grow further. Therefore, SEBI, the market regulator in India, has implemented various measures to protect the interests of all stock market investors. 

A contract note contains information like the price, brokerage fees, taxes, etc., in a specific format. This brings transparency for the investors and is therefore one of the steps towards protecting the investor interest.

By looking at a contract note in place, an investor can be sure about the execution of the order that he/she may have placed via the broker. This document can also come in handy in case of any legal issues related to a trade. Therefore, investors must insist that their broker provides them with a contract note in a timely manner.


Contract notes act as a summary of trades that an investor has entered on a given trading day. Apart from trade information, this document also allows an investor to get a quick overview of daily profits and losses. Since contract notes are mostly in digital format, these can be easily accessed at any time. 


Do all investors receive contract notes?

Yes, as per SEBI mandate, all investors can receive contract notes from their brokers if they have bought or sold securities on a stock exchange

Can I get a physical contract note instead of a digital one?

Yes, depending on the broker, an investor/trader can request for a physical contract note if not comfortable with a digital option.

What if I do not receive my contract note?

If you do not receive your contract note despite executing a trade, it could be because you did not provide your email id to the broker or because the trade may not yet be executed.

What if a contract note is not digitally signed?

If a contract note is in digital format, it has to be digitally signed and the broker ensures this. However, in absence of a digital signature, it will not be considered valid or it may have been physically issued.

Are contract notes free or do they come for a fee?

Yes, contract notes are provided by all brokers free of cost to the investor/trader, who may have executed trades on a given trading day.

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