Demat Account Charges and Fees

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While several brokers, financial institutions, banks and broking firms offering a free Demat Account to their customers, certain charges are levied on the customer at a later stage or after some time depending on the various options provided. It is essential for you to know all about the Demat Account charges.

You can choose any broking firm, financial institution or bank who is an authorised DP with either NSDL or CDSL and is registered with SEBI. Each one of these companies comes with their brokerage demat account charges. 

The Demat Charges

A crucial piece of information to be considered is the demat charges. Here is a summary of these:

1. Demat Account Opening Fees: Nowadays, the Demat Account opening charges levied by the DPs are either nominal. Banks provide it completely free if you set up a 3-in-1 account with them, i.e. a savings bank account, a trading account and a Demat Account. However, most private broking firms like Angel One have no account opening fees and provide a seamless account opening experience for you via their online trading platform. Nevertheless, if any additional costs are involved, such as stamp duty, GST and other statutory levies by SEBI, they will be charged as applicable. Therefore, you must always compare the various DPs and their Demat Account opening charges and choose the best one.

Looking to open a Demat account. Read on here to learn about the process of opening a Demat account.

1. Demat Account Annual Maintenance Charges (AMC): Some firms charge a basic fee, whereas a few DPs even waive off the Annual Maintenance Charge for the first year and start the billing cycle from the second year onwards. Each depository has its specific guidelines for Demat charges. For instance, Angel One does not charge any Annual Maintenance Charges for the first year. From the second year onwards, a quarterly maintenance charge of ₹60 + taxes is levied. Angel One provides various value-added services such as online transfer of funds via net banking and UPI, Fundamental research, and artificial intelligence-based advisory ARQ Prime for technical and derivatives trading ideas so to name a few services. For BSDA (Basic Services Demat Account) Clients:* Value of holdings in Demat account upto Rs.4 Lakh – NIL* Value of holdings in Demat account between Rs.4 Lakh to Rs. 10 Lakh – Rs. 100 + GST / Year
2. Demat Account Custodian Fees:DPs either charge a one-time fee, annually or unless specified. Most of the time, this fee is paid directly by the company to the depository, which is either NDSL or CDSL. The majority of the broking companies, like Angel One, waive off the custody fees.
3. Demat Account Transaction Fees: The transaction fee is also known as Demat Account brokerage charges, are charged for every transaction completed by the DP. Some DPs charge a percentage of the value of the transaction, while others charge a flat fee per transaction. There are other Demat Account charges like credit charges, rejected instruction charges, various taxes and cess, delayed payment fees and so on. When you are in process of selecting a DP for your investor purpose, do make sure to have a look at all the charges that are levied to your Demat Account.

Full Service vs Discount Broker

While shopping for competitive brokerage demat account rates have you wondered how some brokers offer cheaper rates than others? There are two types of stockbrokers available in the market – full service brokers and discount brokers. You will find discount brokers offering lower rates. If you get attracted by lower rates, then you should know that both full service brokers and discount brokers suit different types of investors, and you must select a broker based on the services they offer.

Discount brokers act as functionaries, limiting their services in carrying out only buy and sell instructions as per the investor’s direction. Full service brokers provide market research reports, company fundamental reports, trading and advisory services on a wide range of investment products. Full service brokers, therefore, charge higher fees compared to discount brokers. Discount brokers charge about 60 percent less than full service brokers.

Since broking charges directly impact the profit amount from an investment, you need to compare all the alternatives available to you carefully. For example, a day trader, who makes 10 to 15 trades a day cost with a full service broker would be significantly high. Selecting a discount broker will help him lower the charges. Alternatively, if you are looking for a comprehensive investment solution – take advantage of research reports, technology-enabled trading advice, and seamless trading platform, a full service broker is an affordable choice. However, nowadays, to stay in the competition, several full service brokers have also lowered their charges. Many of them now charge like a flat fee on transactions, zero demat account opening charges, and more. So get the best of both worlds – compare the services you want, along with the charges to find the best match for your requirements.

Conclusion

Opening a Demat attracts several charges. It is imperative to learn the various charges applied to Demat trading because it will impact your earnings from the investment. New entrants in the market may charge less than established stockbrokers to win over investors. However, finding a trusted broker with a track record is more important than finding the cheapest one when it comes to stock market investment.

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