Indian stocks exchanges have registered steady growth in the number of investors in the past few years. Considering that there is a rise in the number of new investors, various brokerage houses have entered the market, offering an array of services. It has created a wide disparity in the charges as they all are trying to gain a competitive advantage. It leads us to the topic of the various fees associated with a Demat account, types of stockbrokers, and how to choose the best broking house.
After setting up a Demat Account, you need to consider Demat Account charges. We can categorise these charges into two categories – operational charges (AMC, Tax, and more) and transactional charges or charges collected by the broker for carrying out the trades for clients.
|Angel One Charges||Charges|
|Account Opening Fees||Free|
|Brokerage on Delivery Trade||Free|
|Account Maintenance Charges||Free for 1st Year
From 2nd Year onwards...
Non-BSDA Clients ₹ 20 + Tax / Month
For BSDA (Basic Services Demat Account) Clients: - Holding Value Less Than 50,000 : NIL - Holding Value Between 50,000 To 2,00,000 : ₹ 100 + Tax / Year
|DP Charges||₹ 20 Per Debit Transaction ₹ 50 Per Debit Transaction For BSDA Clients|
|Pledge Creation / Closure||₹ 20 Per ISIN ₹ 50 Per ISIN For BSDA Clients|
|Demat||₹ 50 Per Certificate|
|Remat||₹ 50 Per Certificate + Actual CDSL Charges|
|Call & Trade / Offline Trade||Additional Charges Of ₹ 20 / Order|
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 Demat Account brokerage charges.
THE DEMAT CHARGES :
A crucial piece of information to be considered are the demat charges. Here is a summary of these:
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 the 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 for you.
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 charges.
For instance, Angel One does not charge any Annual Maintenance Charges for the first year. From the second year onwards, a monthly maintenance charge of Rs.20 + 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.
SEBI has revised the Basic Services Demat Account – BSDA, from 1st June 2019 where there are no annual maintenance charges for debt securities up to Rs. 50,000. Conversely, a maximum amount of Rs. 100 + taxes would be levied if the holding is from Rs. 50,000 upto Rs. 2 lakhs.
DPs either charge a one time fee, annually or unless specified. Most of the times, this fee is paid directly by the company to the depository that is either NDSL or CDSL.
Majority of the broking companies, like Angel One, waive off the custody 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.
Apart from the fees mentioned above, 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 to select 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 rate 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 carefully compare all the alternatives available to you. 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 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.
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.
Frequently Asked Questions
What are the hidden charges in DEMAT account?
Whether your broker is offering free DEMAT or chargeable account, there are always some costs involved in trading using it. Some of these charges are levied by authorities like SEBI and NSDL and collected by the broker. Also, the broker will charge AMC annually and fees for carrying out trading orders.
Before you start trading, ask your traders about all the standard and additional DEMAT account opening charges.
Is Angel One DEMAT account free?
Yes, you can open an Angel One DEMAT account for free and receive delivery of stocks free for lifetime.
Can we open DEMAT account without a broker?
Yes, you can open a DEMAT account directly with the depository participants, NSDL and CDSL. But to trade in stocks, you will need a trading account, which you need to open with a broker. For convenience sake, it is wise to have both DEMAT and trading account with the same broker.
What is the advantages of opening DEMAT account?
DEMAT stands for a dematerialised account that you open to take delivery of the stocks purchased. There are a couple of benefits of opening a DEMAT.
- You receive the stocks in a digitised format so you can avoid the hassle of receiving paper scrips
- It reduces the risk of theft, loss, or damage of paper scrips
- Keeping track of your holding becomes easy
- You can buy or sell any quantity when you have a DEMAT account
- It reduces transaction and execution time and lowers the additional costs associated with receiving physical shares
How are DEMAT charges calculated?
Some of the DEMAT account opening charges that the broker might collect from you are as the following.
- Account opening charge
- Account maintenance charges
- Transaction charges
- Delivery charges
- Dematerialisation and re-materialisation charges
- Pledge creation and pledge invocation fees
- KYC and bank details modification charges
Ask the broker to give you a complete list of DEMAT account charges to you. You can visit Angel One charges page to know more about our fees.
Can I open my DEMAT account directly with the depository?
You can do it through a depository participant registered with the depository. There are two depository bodies, namely, Central Depository Services (India) Ltd. and National Securities Depository Ltd. (NSDL). All Demat accounts are opened under either of the two.
To open a DEMAT, you need to complete KYC formalities and pay certain DEMAT account brokerage charges. Check with your depository participant for details.
What is the minimum amount to open DEMAT account?
Nowadays, most stockbroking houses do not charge to open a Demat account. Other, offer competitive rates. However, there can be further associated charges along with the first deposit that you’d need to make.