Demat Account
A Demat Account or Dematerialised Account provides the facility of holding shares and securities in an electronic format. During online trading, shares are bought and held in a Demat Account, thus, facilitating easy trade for the users. A Demat Account holds all the investments an individual makes in shares, government securities, exchange-traded funds, bonds and mutual funds in one place.
Demat Account is an account that is used to hold shares and securities in electronic format. The full form of Demat account is a dematerialised account. The purpose of opening a Demat account is to hold shares that have been bought or dematerialised (converted from physical to electronic shares), thus making share trading easy for the users during online trading.
Demat Account - Fee
Opening charges are nominal or nil. Some banks do it for free if you open a 3-in-1 account, where you can open a savings account, demat account and trading account in one go.
Money buys comfort. It is no different when it comes to trading in stocks. Unlike earlier when you had to go through the rough and tumble to buy and sell shares, the entry of demat accounts in 1996 eliminated the tedium of paperwork. Now you can invest in shares without getting up from the armchair.
No longer do you have to purchase share transfer stamps, visit the company’s registrar to get shares transferred or worry about share certificates being stolen. The demat account — which is now mandatory for stock trading — takes care of everything.
No longer do you have to purchase share transfer stamps, visit the company’s registrar to get shares transferred or worry about share certificates being stolen. The demat account — which is now mandatory for stock trading — takes care of everything.
GST
Tax levied by the government on the services rendered. 18% of ( brokerage + transaction charges)SEBI Charges
Charged at ₹10 per crore by Securities and Exchange Board of India for regulating the markets.Physical CMR request
First CMR request is free. ₹20 + ₹100 (courier charge) + 18% GST for subsequent requests.Payment gateway charges
₹9 + GST (Not levied on transfers done via UPI)Transaction/Turnover Charges
Charged by exchanges (NSE, BSE, MCX) on the value of your transactions.BSE has revised transaction charges in XC, XD, XT, Z and ZP groups to Rs.10,000 per crore w.e.f 01.01.2016. (XC and XD groups have been merged into a new group X w.e.f 01.12.2017)
BSE has revised transaction charges in SS and ST groups to Rs.1,00,000 per crore of gross turnover.
All charges may little differ in different applications like Upstox, Zerodha, Kite, AngleBroking , etc.
Demat Account - Benefits
In the Depository System, the ownership and transfer of Securities takes place by means of electronic book entries. Demat account holders can buy and hold Shares, NCDs or other debt securities.
- No Stamp duty on transfer of securities.
- Immediate and fast transfer of securities.
- Elimination of 'Bad Deliveries'.
- Elimination of risk by loss, theft, mutilation etc.
- Faster settlement and disbursement of Corporate benefits like Bonus, Rights, Dividends etc.
- Elimination of mismatch in Bank Accounts and Address.
- Convenient Nomination facilities.
- Convenient Transmission formalities in case of death of a holder.
- No TDS deduction for demat securities.
- Demat account information and statement regularly sent to the customer.
Demat Account Risk
While the benefits of demat accounts are largely useful for many, there might also be some features that might be perceived as disadvantages for some. Let us take a closer look at some of these:
One of the points raised against demat accounts might be that the account holders are required to pay an annual maintenance charge. This charge applies to the trader even if there is only a single share held in the demat account.
However, it is important to consider that some depository participants, such as IIFL, can offer traders attractive deals while opening a demat account with them. You can open a demat account online at absolutely no charge and also pay no account maintenance charge for a whole year.
As opposed to dealing with physical securities, trading in electronic securities might seem somewhat difficult and even complex to those new to the world of online trading. However, this disadvantage can also easily serve as an advantage of demat accounts. While demat accounts require a little initial effort in tech-savviness, they are user friendly and incredibly accessible. Over time, you can find that you are able to trade from anywhere and at any time, entirely at your own convenience.
