Demat Account Charges
A Demat account is a virtual account where assets such as shares, mutual funds, bonds, ULIPs, digital gold etc. can be held in dematerialised or electronic form. Akin to a bank account being legally mandatory to carry out online transactions, a Demat account is also compulsory for buying and selling i.e., online share trading in India.In fact, the meteoric rise of online share trading in India can be credited to the ease, safety, and convenience provided by Demat accounts. But there are no free lunches in this world. Similarly, contrary to popular assumption, a Demat account is never really free. Yes, a Demat account has various charges that add to the overall cost of your trade. So, while most brokers provide free Demat account opening, they do charge hefty brokerage and other Demat account charges like account maintenance charges, dematerialisation charges, pledge charges etc. Majority of the time, investors end up paying a big chunk of their profits in brokerages. This is why understanding Demat account charges is a must to ensure your profits aren’t washed away by a wave of Demat account charges. But before we understand the nitty-gritties of Demat account charges, it is important to understand how a Demat account works.
How do Demat accounts work?
A Demat account works in tandem with a trading account. A Demat account only stores your assets. It does not function on its own. You can open a Demat account online in a hassle-free manner. At m.Stock, we offer a free Demat account that can be opened online within five minute. By opening an online Demat account, you can enter the world of seamless trading.
In addition to a Demat account, there is another account required for trading in the stock market. This account, known as a trading account, is the conduit through which you can place buy and sell orders in the market.
An online Demat account is akin to a bank locker where the securities purchased by you are stored in an electronic form. You can place an order to buy or sell securities through your trading account. Once you place a buy order through your trading account, the order is submitted to the relevant stock exchange by your stock broker and the order gets processed.
The purchased securities, for instance shares and mutual fund units, are then dematerialised or converted into an electronic form. Following this step, the digital certificates of securities get stored in your Demat account.
Conversely, when you place a sell order, the relevant number of securities get debited from your Demat account. Buying and selling securities through an online Demat and trading account is, thus, quite similar to depositing and withdrawing money to and from your bank account.
The Types of Demat Account Charges Explained
Demat account opening charges are the charges that are levied when you apply for a Demat account. These charges are considered to be part of the standard procedure of opening a Demat account. It is important to note here that all the Demat accounts opened in India are held at one of the national depositories, namely the Central Depository Services Limited (CDSL) and the National Securities Depository Limited (NSDL).
The brokerage firm you choose to open your Demat account serves as the intermediary between you and one of the depositories mentioned above. The Demat account charges comprise of the following major elements.
Demat Account Opening Fee
The Demat account opening fee is a one-time charge that is levied whilst opening a Demat account. This charge is usually in the form of a flat fee.
Demat AMC
Another important element of the Demat account opening charges is the Demat AMC or Annual Maintenance Charges. Your stock broker charges a Demat AMC on an annual basis for the maintenance of the account. Even if you do not carry out any trades in your Demat account throughout the year, you are liable to pay the applicable Demat AMC.
Dematerialisation Of Share Certificates
Dematerialisation is the process of converting physical share certificates into an electronic form so that they can be saved in your Demat account. Your Demat opening charges contain a fee for the dematerialisation of share certificates.
Conversion Of Mutual Fund Units
There is a flat fee levied for the conversion of the physical units of mutual funds into an electronic form.
Rematerialisation Of Share Certificates
Rematerialisation or the conversion of digital share certificates into physical share certificates, is also charged in your Demat opening charges.
Opening a Demat Account with m.Stock - Charges
We have discussed what Demat account charges are along with their respective frequencies. The actual Demat account opening charges vary from one depository participant to another. Should You choose to open a Demat account at m.Stock, you will be required to pay zero Demat account opening charges.
With over 25 years of expertise providing excellent services to our customers, we offer a Demat account opening experience that is swift, seamless, and cost-effective. In addition to zero Demat account charges, we also offer the following excellent benefits.
Zero brokerage on equity delivery transactions
Free trades for mutual funds
No annual charges
No subscription fee
You can visit our official website and open a free Demat account now.
What Are The Different Modes of Opening a Demat Account in India?
You can open a Demat account through two modes, namely, online mode and offline mode. Here are the steps you must follow to open an online Demat account at m.Stock:
Download our official mobile application - m.Stock.
Sign up using your mobile number.
Enter the necessary Know Your Customer details.
Verify your Proof of Identification and Proof of Address.
Verify your PAN details.
Verify your date of birth.
Select a payment method that is feasible to you.
Complete the payment process.
Complete your profile on m.Stock, including the submission of your bank account details.
Once your Demat account has been opened, your login credentials shall be shared with you, and you can start trading.
Alternatively, you can opt for the offline mode of opening a Demat account. This process is more cumbersome than its online counterpart.
Benefits of Opening online Demat account with m.Stock
Zero account opening charges
Five minutes for the onboarding process
e-sign and Digi locker benefits
Paperless process
Instant activation of your Demat account
Read Also: How To Open Demat Account Online
To Sum It Up
Head over to the m.Stock mobile trading application now and open an online Demat account without paying any account opening charges. Enjoy Zero Brokerage on equity delivery, mutual funds, and IPOs.
Conclusion
The benefits of opening a Demat account cannot be stressed more than they already have. For investors, a Demat account opens doors to a world of investment as it is linked to a trading account and your bank account to facilitate seamless trading transactions. Furthermore, you can make the most of trading activities with your Demat account accessible 24x7 online from your smartphone. m.Stock gives you all the good reasons to begin trading by opening a Demat account first. What do you get? A fast and convenient paperless account opening process, all done online with instant activation and the ability to start your trading and investing journey with a zero-starting fee as soon as possible.
More Related Articles
Difference between Dematerialisation and Rematerialisation
29 July 2024 | 7 mins read
Recently, the Securities and Exchange Board of India (SEBI) has mandated that all securities be issued in a dematerialised form. It has also made it mandatory for traders to possess their securities in a demat form if they wish to sell them through the stock exchanges. However, as of now, traders are also allowed to convert their dematerialised securities back to their physical form through the process of rematerialisation. If you’re a trader getting into the intricate world of the securities market, then it is important for you to know what dematerialisation and rematerialisation of shares entail, and how different they are from one another.
Advantages of Zero Brokerage Trading
29 July 2024 | 4 mins read
A zero brokerage account is an account where no charges are levied on traders by the broker while executing trades. On the other hand, a traditional trading account requires some percentage of the total trade value to be paid by the client in terms of brokerage. The benefits of zero brokerage accounts such as affordability and transparency have made them a popular choice. They allow you to concentrate on your trades without having concerns about expenses. Moreover, they have made it possible for most small investors to take part in trading. The term “zero-brokerage” may suggest that there are no costs associated with carrying out transactions. But please note that there will be regulatory charges or transaction fees levied by the exchanges.
How to Open Demat Account Online
29 July 2024 | 4 mins read
Prior to 1996, trading used to be done in India by exchanging actual physical share certificates between buyers and sellers. However, the Securities and Exchange Board of India (SEBI) introduced the process of Dematerialisation in 1996, which revolutionised the broking industry. Dematerialisation is the process of converting physical securities into electronic form. This allows for safe and quick trading, monitoring, and transferring of securities thereby eliminating the risk of theft, forgery, and duplicacy. While mandatory and beneficial, a Demat account does come with its own set of charges which you must consider before opening a Demat account.
FAQ
Is a Demat account a necessity for trading?
Yes, a Demat account is a necessity for trading. You can open a Demat account with a registered depository participant, for instance, Mirae Asset.
Should I necessarily dematerialise my physical share certificates?
Yes, it is mandatory to dematerialise your physical share certificates. Depository Participants usually charge a fee for this service.
How can I buy and sell shares through a depository participant?
You can open a Demat and trading account with a depository participant and start trading in the securities market. Your buy and sell orders are placed through your DP and submitted to the stock exchange for execution and, in turn, delivery.
What is Demat AMC?
Demat AMC is the annual maintenance charge for your Demat account. This charge is levied by stock brokers for the maintenance of the account.
Is Demat tax-free?
Demat accounts may hold various securities and assets. While the interest that is earned from particular investments like government bonds and securities may be free from any tax liability depending on your overall income, interest from other securities like equities and debt instruments may be liable for taxation according to your general income slab.
Should I pay for a Demat account?
Depending on the brokerage you opt for, you may be able to open a Demat account free of cost but may be charged heavily thereafter for trading transactions (reflected by potentially hefty brokerage fees). Some brokers do charge you a Demat account opening fee which is a one-time charge, but their brokerage may be nil or nominal when you conduct certain trades.
How much money can I put in a Demat account?
A Demat account holds your securities like shares and bonds, but not money per se. The value of the securities in your Demat account is taken as the value of your Demat account at any given time. The money that you may use for trading and investing is held in your bank account linked to your Demat account. It is important to note that there is no limit to the value of securities held in your Demat account.