How buying and selling works in India

To buy shares in India you need two accounts. They are usually opened together, in one sitting, which is why almost everybody assumes they are one thing. They do completely different jobs.

trading account

The account that places your orders. Money moves into it from your bank, and orders go out from it to the exchange.

demat account

The account that holds the shares themselves, electronically. Short for dematerialised — shares were once paper certificates, and this is what replaced them.

T+1

The settlement rule India uses. Shares reach your demat account, and money leaves for a purchase, one working day after the trade. The T is the day you traded. This is the rule today; settlement rules are set by SEBI and have been changed before.

STT

Securities Transaction Tax, a government charge on trades on an exchange. What it applies to depends on the kind of trade — on an intraday equity trade it is charged only when you sell. It is deducted automatically, and the rates are set by the government and have been changed before.

What happens when you press Buy

1. Your order leaves your trading account and reaches an exchange — the NSE or the BSE.
2. The exchange matches it against somebody selling at a price you were willing to pay.
3. The trade is confirmed. You will see it in your broker's app within seconds.
4. One working day later the shares appear in your demat account, and the money leaves your trading account. That is the T+1 part.

Two ways to say what price you will accept