If you are a swing trader or someone who occasionally needs a little extra time for a stock’s price to hit your target, Paytm Money’s T+5 Pay Later feature offers a sweet spot between rigid intraday trading and capital-heavy delivery trades. It gives you the leverage to buy up to 5x (Source: NSE) the value of your capital and the flexibility to hold your position for up to 5 days.
- Brokerage Charges for T+5 Pay Later Trades
- Interest Charges Explained in Simple Terms
- Daily interest calculation
- Example for 1–5 days
- Other Charges and Taxes
- Understanding the 5-Day Holding Period
- Auto Square-Off and Delivery Conversion Rules
- Auto Conversion on Day 1-4
- Square-off on Day 5
- Important Cost-Related Things to Keep in Mind
- When charges apply
- When they don’t
But when you use borrowed funds to trade, understanding the associated costs is vital to protecting your profits. Here is a complete breakdown of the charges, holding period rules, and what you need to keep in mind when using T+5 Pay Later.
Brokerage Charges for T+5 Pay Later Trades
When it comes to brokerage, Paytm Money’s T+5 Pay Later keeps things very simple. Trading on T+5 Pay Later incurs the standard flat brokerage fee of up to ₹20 per order. There are no surprise brokerage costs here. You pay the exact same transaction fee as you normally would for an intraday or delivery trade.
Interest Charges Explained in Simple Terms
Because T+5 Pay Later essentially acts as a short-term loan (Paytm Money funds up to 80% of your trade value), you have to pay interest for the privilege of holding a leveraged position overnight for up to 5 days.
Daily interest calculation
Interest is charged at roughly 0.05% per day.
One critical point to remember is that interest is calculated on calendar days, not just trading days. If you hold a position over the weekend or through a public holiday, the interest for those days will also be added to your total cost.
Example for 1–5 days
Let’s look at a practical example of how these interest charges accumulate. Imagine you decide to buy shares worth ₹1,25,000 on a Monday using T+5 Pay Later.
(Assuming 5x Leverage on the stock)
- Your Cash (Margin): ₹25,000 (You pay this upfront)
- Borrowed Amount: ₹100,000 (Paytm Money provides this)
- Brokerage Fee: ₹20 on Buy and Sell
- Daily Interest: ~₹50 (Calculated at 0.05% of the funded value)
Here is how the interest costs play out depending on when you exit the trade:
- 1 Day (Exit on Tuesday): ₹50
- 2 Days (Exit on Wednesday): ₹100
- 3 Days (Exit on Thursday): ₹150
- 5 Days (Exit on Friday): ₹250
By exiting early (like on Day 2 or 3), you can significantly reduce the interest burden on your profits.
Other Charges and Taxes
Do note that all standard statutory and regulatory charges continue to apply as usual. In addition to brokerage and interest, individuals are required to pay the applicable Securities Transaction Tax (STT), Goods and Services Tax (GST), stamp duty, and exchange turnover charges.
Understanding the 5-Day Holding Period
The “T+5” in the name represents the strict timeline of your trade.
- T (Trade Day): The day you buy the stock using the “Intraday” option while enabling the “T+5 Pay Later” toggle under the NSE tab.
- T+1 to T+4: During this holding window, you have total control. You can monitor the stock’s performance and choose to sell your position, continue holding it, or convert the trade to delivery by adding money to your Trading Balance.
- T+5 (Final Day): On the final day, your deadline is 8 AM. You are essentially given five full trading days to let your market thesis play out without locking up your entire capital upfront.
Auto Square-Off and Delivery Conversion Rules
One of the best aspects of T+5 Pay Later is that it puts you in the driver’s seat—with a couple of choices on how to exit your trade before time runs out.
If a trade is working in your favour and you want to keep the stock in your portfolio for the long term, you can easily Convert to Delivery. To do this, simply add the remaining funds (the borrowed amount) to your trading balance before the 5 days are up. Once the funds are paid off, the shares move safely to your Demat account.
Auto Conversion on Day 1-4
All available cash funds will be adjusted against your open T+5 holdings at the end of the Trade Day(T to T+4). The maximum possible quantity will be converted into your owned delivery, and any remaining quantity will continue under T+5 for up to 5 days.
Square-off on Day 5
The “5” in T+5 is a hard limit. If you forget to sell your shares or fail to add the necessary funds to take delivery by the end of Day 5, the system will trigger an Auto Square-Off.
At around 8:00 AM on the 5th day, the broker will automatically sell your shares at the current market price to recover the funded amount. This can be risky if the market closes at an unfavourable price, as it could lock in an unexpected loss.
Important Cost-Related Things to Keep in Mind
To use T+5 Pay Later successfully, keep these final cost rules in mind:
When charges apply
- Overnight Holds: The 0.05% daily interest applies every time you hold the position past the closing bell.
- Weekends and Holidays: Interest doesn’t take a day off. Holding a stock from Friday to Monday means you will be charged interest for Saturday and Sunday as well.
- Added Funds Usage: If you deposit cash into your account while you have an open T+5 position, the system automatically uses that cash at the end of the day to convert as much of your T+5 position into a regular delivery trade as possible.
When they don’t
- Same-Day Exits: If you buy a stock using T+5 Pay Later but decide to sell it on the exact same day (essentially treating it like an Intraday trade), you will not be charged any interest. You will only pay the standard ₹20 brokerage fee.
- Post-Conversion: Once you add funds and fully convert your position to a Delivery trade, the daily interest charges stop immediately.
Ultimately, T+5 Pay Later is a powerful tool when used responsibly. As long as you keep an eye on the 5-day clock, factor the daily interest into your profit targets, and have a clear exit strategy, it can be a great way to maximize your trading potential.
Disclaimer: Investment in securities market is subject to market risks. Read all the related documents carefully before investing. This content is purely for information purpose only and in no way is to be considered as an advice or recommendation. The securities are quoted as an example and not as a recommendation. Investors are requested to do their own due diligence before investing.
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