A Contract Note is a confirmation record of any transaction which is executed on a stock exchange through a stock broker.
The Contract Note is automatically sent in electronic format by the stock broker to the registered email address of the client.
Contract Note Sample
Let’s take a real example.
Rohit has a demat account with stockbroker Zerodha. He purchases one share of ‘Kajaria Ceremics’ for ₹ 375.5 per share.
At the end of the day, Rohit will receive an email with an attachment containing the contract note in PDF format.
For security reasons, the attachment will be protected by a password – which is Rohit’s PAN number in capital letters.
The Contract Note will look something like this (Click on the image below for higher resolution / clearer image):
Note: Details like Name of the client, Address, PAN Card number etc have been edited out of the contract note. Apart from personal details, the above contract note is a original copy from the broker.
Contract Note Format
The Contract Note is an important piece of document, which you can use for filing taxes, verifying your stock purchases and even legal disputes if there are any.
Contract note has key details of all transactions executed on a particular day – including date, time, price, quantity traded, brokerage charges, government taxes etc.
It also includes a Reference Number (Contract Note Number) which can be used to cross-check the details of the transaction with the stock exchanges (BSE or NSE).
Contract Notes also have the following details:
- SEBI Registration number of the Broker.
- All details of executed trade like – Order Number, Trade Number, Trade Date, Trade Price, Trade Execution Time, Traded Quantity, Brokerage Charged, Settlement Reference Number, Details of other Service Charges, Government Taxes etc.
- Digital Signature of Broker in Electronic format.
Contract Notes are also useful for the following:
- Calculation of Short Term and Long Term Capital Gains Tax.
- Calculation of total brokerage charged and GST on brokerage amount.
- Calculation of data for filing Income Tax Returns.
- Legal Proof in case there is any dispute with the broker.
- Examining the genuineness of transactions (the Contract Note number can be used to verify the transaction with the stock exchange).
Next time you buy or sell a share from the stock market, you can verify all the order details including additional charges from the contract note.
If you have any questions, drop them in the comments section below.