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What are Depository Participant (DP) charges?

•6 min read•by Angel One
DP charges apply when shares are debited from a demat account. They impact selling costs and overall transaction expenses.
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DP charges are charges imposed by a depository participant (DP) and the depository (NSDL or CDSL) when shares are debited from a demat account (e.g., sales or transfers). These DP charges are applied primarily in the sale or transfer transactions and constitute a part of the overall expenses in the trading transactions. Understanding the workings of DP charges is important for investors to be able to accurately calculate costs, returns and tax implications associated with demat transactions. 

Key Takeaways 

  • DP charges are applied only on debit transactions in a demat account. 

  • DP charges are per ISIN transaction charges, and not per share quantity. 

  • Buy transactions do not attract DP charges. 

  • DP charges are separate from brokerage and statutory taxes. 

What are DP Charges?

Depository Participant (DP) charges are levied on all sell transactions of your Demat Account. These charges are exclusive of brokerage and are not reflected in contract notes. DP charges are the revenue source for depositories and their participants. 

DP charges are a flat transaction fee, per ISIN, irrespective of the quantity sold. Hence, the fee charged is per ISIN and not the volume sold. So, these charges remain the same whether you sell 1 share or 100 shares of the same ISIN. 

Also Read: How to Find DP ID? 

Components of DP Charges

DP charges consist of several cost elements that depository participants charge for maintaining and operating a demat account. These charges are not the same for all as they depend upon the type of service availed and the nature of transactions executed. 

  1. Account Maintenance Charges: This is a periodic charge levied in return for maintaining the demat account. It covers services like electronic holding of securities, maintenance of records, servicing of accounts, etc. 

  1. Transaction Charges: These are charged whenever securities are debited or credited because of buying, selling or transferring shares. Charges can vary according to the value or amount of the transaction. 

  1. Pledging/ Unpledging Charges: The security pledging and release are considered collateral for payment; depository participants will charge a fee to process these requests. 

  1. Dematerialisation and Rematerialisation Charges: Charges are made on the conversion of physical securities into electronic form and vice versa, the certificates render service. 

Who Levies DP Charges?

DP charges are levied by depositories and depository participants for every listed stock. A depository participant is a mediator between depositories and the investor.  

The National Securities Depository Limited (NSDL) and Central Depository Securities Limited (CDSL) are the two major depositories in India. Banks, financial institutions, and stockbrokers, like Angel One are examples of depository participants.  

Usually, depository participants levy four kinds of charges (or fees) for a Demat account transaction; they are, account opening fee, annual maintenance fee, custodian fee, and transaction fee. 

Also Read: What is an NSDL Demat Account? 

Why Are DP Charges Levied? 

A stockbroker needs to become a depository participant to provide a Demat account to clients. Moreover, they need to pay a membership fee to NSDL or CDSL, to the tune of lakhs, along with several other fixed costs and also advanced prepaid transaction charges. The brokers pass on these charges to their customers through an additional fee to reclaim these expenses. 

How Much DP Charges Are Levied? 

The charges levied by depositories apply uniformly to all sell transaction charges. But the actual depository debit transaction fee has changed. The current structure is as follows (depository + broker): 

Depository Charges (Actual NSDL/CDSL Fees) 

  • Demat transaction charges for CDSL: ₹3.50 approx. per debit instruction (may vary by volume and holder discounts). 

  • Demat transaction charges for NSDL: ₹4.00 approx. per debit instruction for NSDL (exacts depend on tariff slabs and depository rules) 

Charges levied by the depository participants can vary across brokers. The charges levied by Angel One are: 

  • ₹20 Per Debit Transaction (plus applicable GST) 

  • For male holders, ₹3.5 is the depository charge (CDSL) and ₹16.5 is the Angel One charge. For female holders, ₹3.25  is the depository charge (CDSL) and ₹16.75 is the Angel One charge.  

  • ₹50 Per Debit Transaction For BSDA Clients (These are charged in addition to the depository’s own levy and are passed through by the broker) 

These charges are exclusive of all taxes and apply only to delivery sell transactions and not to intraday buy/sell trades. Angel One offers zero-brokerage charges on your demat account for the first 30 days.  

Type of Charge 

Charges 

Account Maintenance Charges 

For BSDA (Basic Services Demat Account) Clients: 

* Value of holdings in Demat account up to ₹4 Lakh - NIL 

* Value of holdings in Demat account between ₹4 Lakh to ₹10 Lakh - ₹100 + GST / Year 

For non-BSDA clients : 
₹60 + GST per quarter (Charged after your first trade each quarter) 

DP Charges 

₹20 + GST per ISIN 

₹50 (+ CDSL) per debit for BSDA 

Pledge Creation / Closure 

₹ 20 Per ISIN 

₹ 50 Per ISIN For BSDA Clients 

Demat 

₹ 50 Per Certificate 

Remat 

₹ 50 Per Certificate + Actual CDSL Charges 

Reasons for Levying DP Charges 

In order to offer the investors a demat account, a stockbroker needs to register as a depository participant with NSDL or CDSL. This includes being required to pay membership fees and regulatory charges and meet infrastructure and compliance requirements, which can be quite a high upfront and ongoing cost. 

In addition, brokers have operational costs to meet, such as technology facilities, record-keeping costs, and processing transactions. To recover these costs, brokers place depository participant charges on the clients associated with account maintenance and securities transactions. 

Also Read: Things to Know About CDSL Demat Account 

How to Minimise DP Transactions? 

While depository participant charges are unavoidable for maintaining and operating a demat account, the impact of these charges overall can be controlled with disciplined trading behaviour, informed account decisions. Structuring transactions is one of the methods that will help reduce the repetitive costs without impacting compliance. 

  1. Opt for Long-Term Investing: In case of frequent buying and selling of securities, multiple debit entries are made in a demat account. Since depository participants charge for each debit transaction, increased trading frequency will directly lead to increased cumulative costs. 

Holding securities for longer periods reduces the number of sell transactions and, in turn, the repetition of the occurrence of DP charges. A long-term holding strategy also avoids eroding away incremental returns due to frequent transaction-related costs. 

  1. Bulk Transactions: Making trades in smaller quantities in multiple transactions can incur depository participant charges every time securities are debited. This leads to greater total costs, even if total traded values are not affected 

Combining trades with fewer and larger transactions aids in reducing the number of chargeable debits. As the depository participant charges are applied according to transaction and not based on the quantity, bulk execution proves to be cost-efficient. 

  1. Choose Wisely: The depositary participant charges vary from one broker to another, depending on account maintenance fees, transaction charges, and service-related costs. Reviewing the full details about the fees before opening a demat account is the need of the day. 

Understanding charges associated with maintenance, transactions, pledging and just about anything else helps in estimating long-term costs. Deciding on a DP with transparent and competitive pricing will guarantee better control over ongoing expenses with regulatory requirements. 

These practices help investors deal with DP-related costs in a systematic way and keep their portfolio running efficiently. 

Why Are DP Charges Important?

Understanding depository participant charges is important for investors to understand the true cost of holding and transacting in securities. These charges have a direct impact on the overall cost of investment and long-term return. 

  1. Cost Management 

Depository participant charges are a constituent of the overall cost of purchasing, selling, or even holding securities in a demat account. Inclusion of these charges in the cost calculation helps investors to estimate the net returns more accurately. Awareness of such costs helps in budgeting better and avoids any unexpected deductions during transactions. 

  1. Tax Implications  

Certain charges that depository participants charge may be subject to any applicable taxes, which depend on the nature of the service. Knowing how these charges are taxed is helpful to investors who want to be able to assess their post-tax costs properly. Proper understanding also aids in the proper taxation reporting and compliance with the prevailing regulations. 

  1. Transparency  

Clear visibility of depository participant charges makes improvement in the investment process possible. When understanding what fees are charged for account maintenance, transactions and other related services, investors are able to more accurately assess costs. Transparency also helps in building trust as it is clear about financial dealings between investors and intermediaries. 

Conclusion 

Understanding DP charges helps investors clearly understand the costs involved in maintaining and transacting through a demat account. These charges result in the gross investment costs, net returns, as well as taxation. Being knowledgeable of the manner and timing of the application of DP charges helps to better plan expenses, create transparency and gain an understanding of the necessary facts for informed decision-making in the management of securities within the ambit of the regulation. 

FAQs

A depository is an institution that functions as a bank for securities (shares, debentures, GI securities, bonds, and MF). It holds securities in electronic format on behalf of the investor and provides services related to security transactions. In India, NSDL and CDSL are the two central depositories, and each broker is a member of one through which it offers Demat services to investors.
Depository participants are stockbroking firms that provide investors with investment and depository services.
Depositories such as NSDL and CDSL collect charges for facilitating the transaction of securities. DP charges apply when you trade securities from your Demat account. Initially, DP charges apply to depository participants, which they pass on to investors.
Yes, it is a standard industry practice. Angel One will collect DP charges on behalf of the depository and pass it on when you sell shares from your Demat account.
The depositories charge a flat fee for all transactions; it is Rs 13 plus GST. But depository participants are free to charge a different amount. In Angel One, depository charges are the following. Rs 20 per debit transaction Rs 50 per transaction for BSDA transactions These fees are excluding taxes. Use a DP charges calculator to calculate total charges on your transaction.
If you are taking delivery of securities in your Demat account, you can’t avoid paying DP charges. However, if you close your intraday position, participate in BTST trading or the futures segment, you can avoid paying depository charges.

DP charges are charged and collected by the depository participant where an investor maintains a demat account. These DP charges are applied in the case of securities debited from the demat account, i.e. when shares are sold or transferred. 

DP charges can not be avoided totally if securities are sold or transferred. The DP charges are not added in buy transactions. It is a practice to reduce the number of sales transactions, as they can reduce the frequency with which DP charges are incurred. 

DP charges for selling stocks depend upon the depository participant's fee structure. Generally, DP charges are for every debit transaction and not per share, i.e. the charge is the same, regardless of the amount of quantity sold. 

DP charges are not charged on a daily basis. These DP charges are imposed only in cases of debit transactions in the demat account, i.e., in cases of selling and transferring of shares and pledging of securities and not just keeping them with the demat account. 

Yes, DP charges are not equal to brokerage. Brokerage is realised by the broker for his services of executing the transactions,and  DP charges are realised by the depository participant for debiting securities from the demat account. 

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