Pocketful

Category: Demat Account

  • Lifetime Free Demat Account (AMC Free)

    Lifetime Free Demat Account (AMC Free)

    Individuals invest their hard-earned money to maximize profits. A dematerialized account helps investors hold and manage securities electronically. However, there are numerous charges that one must pay brokers while investing, which makes the selection of an appropriate demat account a necessity in today’s financial markets. A lifetime free demat account is a type of Demat account that provides all the benefits of a Demat account at zero Annual Maintenance Charges (AMCs).

    This blog aims to outline the concept of Annual Maintenance Charges (AMCs) and how zero AMCs can help you save money. Moreover, we will discuss the advantages of a lifetime-free demat account and the factors an individual should consider when selecting the right demat account. 

    What is AMC?

    Annual Maintenance Charges (AMC) for a Demat account are fees charged by a depository participant (DP), like a bank or brokerage, to keep the account active. This account is used to hold and manage securities electronically, with AMCs typically charged on an annual or quarterly basis. However, some DPs may offer reduced fees for a specific duration, after which regular demat account charges may be applied.

    AMCs can vary based on the type of account or DP. Additionally, many DPs waive the AMC for the first year. When selecting your depository participant, comparing AMCs is important to avoid high charges.  

    Why are Annual Maintenance Charges Charged?

    Below is the breakdown of why these charges are applied.

    DPs use advanced technology and secure systems to manage and store digital investment records. This includes costs for data storage, transaction processing, and cybersecurity. Regular system upgrades, software maintenance, and server expenses are important for maintaining the platform’s smooth and secure operations.

    DPs are also required to adhere to the regulatory standards established by major depositories such as the NSDL and CDSL. These standards involve KYC compliance, security protocols, etc., all of which incur operating costs. Meeting these obligations requires dedicated compliance teams, which increases operational costs.

    AMC is used by DPs to hire people for customer support teams, enabling them to effectively assist account holders with their inquiries. Delivering prompt customer service demands considerable resources.

    For brokers and DPs, annual maintenance charges provide a steady income that covers the costs of maintaining demat accounts, particularly for customers who trade rarely and produce little brokerage. AMC helps DPs provide Demat account services without depending only on brokerage fees.

    How can Zero AMC Help You Save Money?

    A Demat account with zero AMC can be a substantial money saver, particularly for long-term investors or individuals managing smaller portfolios. Here is how it can help you save money.

    Annual maintenance charges (AMCs) generally range from INR 300 to INR 1,000, depending on the DP. Over time, this can add up, eating into investment returns. Eliminating the AMC allows investors to save on fees annually, resulting in enhanced compounding of returns.

    For long-term investors who rarely trade, asset management companies or DPs impose a fixed cost that does not correspond with their minimal transaction activity. Zero AMC lets them keep their investments with no maintenance fees, maximizing long-term growth. An individual who trades frequently pays brokerage for each transaction but eliminates extra costs due to zero AMC.

    Note: A Lifetime Free Demat account is certainly beneficial, but the investors must review other charges that may be applicable to open a Lifetime Free Demat account. Usually, the brokers offering such accounts charge customers an account opening fee or have higher transaction charges than competitors with nominal AMCs but lower transaction fees. Investors must thoroughly compare the services of different DPs before opening a Lifetime Free Demat account.

    Why Open a Demat Account with Pocketful?

    Below are some of the compelling reasons why one should open a demat account with Pocketful:

    • User-friendly Design: Pocketful’s platform prioritizes simplicity, ensuring effortless navigation for both novice and seasoned investors alike.
    • Seamless Experience: Users have access to a wide range of analytical tools and resources to enhance their trading strategies.
    • Cost-effective Trading: Pocketful offers competitive brokerage fees, enabling users to reduce the impact of fees on returns.
    • Dedicated Support Team: Pocketful provides excellent customer support through a dedicated support team, which helps the customer get timely guidance from experienced professionals.

    Documents Required to Open a Demat Account

    The documents needed to open a Demat account are as follows:

    Proof Of Identity

    • PAN (Permanent Account Number) – Mandatory
    • Voter ID
    • Driving License
    • Passport
    • Any other valid identity card issued by Central or State Government

    Proof of Address

    • Voter ID Card
    • Driving License
    • Passport
    • Ration Card
    • Aadhaar Card
    • Utility bills, e.g., electricity bill or gas bill.

    Proof of Income: (For investors who wish to trade in Derivatives – F&O/ Commodities/ Currency)

    • Bank account statement for the last 6 months
    • Latest Salary Slips/ Form 16 in case of salaried person
    • Copy of ITR Acknowledgement
    • Passport
    • Copy of Net-worth Certificate issued by a Chartered Accountant
    • Canceled Cheque

    Advantages of Lifetime Free Demat Account

    Lifetime free Demat accounts offer a host of benefits that appeal to novice and advanced investors alike. Some of the advantages are as follows:

    1. By waiving off annual maintenance charges, these accounts allow investors to save hundreds or possibly even thousands of rupees per year. For long-term investors, this cost-saving strategy leads to increased compounded returns, as it releases them from the burden of recurring fees annually for a lifetime.
    2. Lifetime free Demat accounts perfectly suit beginners and small investors. New investors can enter the stock market with small investing amounts without worrying about the annual maintenance charges.
    3. Lifetime free demat accounts provide an easy solution for investors who believe in passive buy-and-hold investing since they will incur the least amount of expenses. By getting rid of the annual maintenance charges, they can allow their investments to grow without recurring fees. 

    Tips for Choosing the Right Demat Account

    Selecting the right demat account is important for efficiently managing your investments. Here are some valuable tips to help you choose the perfect demat account that suits your needs.

    Tips for Choosing the Right Demat Account
    • Consider AMC and Other Fees: Choose brokers with low or no AMC, especially if you are a beginner or have a small portfolio. Compare transaction fees across brokers if you trade frequently, as these costs apply to every trade. Additionally, brokers may have hidden fees, such as custodian fees or extra charges.
    • Ease of Online Account Management: Check whether the broker provides a user-friendly mobile application for managing your Demat account. Seek out essential features such as real-time updates, tracking of your investments, and quick execution of transactions for a seamless experience.
    • Quality of Customer Service: Choose a broker that offers responsive customer support via phone, email, chat, etc., particularly if you are a beginner in need of assistance and guidance.
    • Reputation and Reviews: Assess the broker’s reputation by exploring online reviews and ratings, with a focus on their reliability and transparency. Examine any grievances or concerns about service quality or undisclosed charges.
    • Account Opening Process: Choose brokers with an easy and quick account opening process that includes digital onboarding and KYC verification.

    Read Also: How to Open a Demat Account Online?

    Conclusion

    In today’s financial environment, selecting an ideal Demat account is essential for both novice and experienced investors alike. A lifetime free demat account is appealing because it lets your investments grow without ongoing Annual Maintenance Charges (AMCs). This cost-effective approach not only maximizes your investment returns but also provides an accessible entry point for those looking to begin their financial journey. When selecting a broker offering lifetime free Demat accounts, consider their transaction fees, customer support, and trading tools. Making the right choice can truly empower you to invest with confidence and clarity, bringing your financial goals well within reach. As the Indian economy continues to grow, there are numerous investing opportunities available to investors today. The use of a lifetime free demat account can help investors create a pathway to a more sustainable and rewarding investment journey.

    Frequently Asked Questions (FAQs)

    1. What is a lifetime free demat account?

      A lifetime free demat account is a demat account that does not charge any annual maintenance charges (AMCs) for as long as the account is active.

    2. Are there any hidden fees with a lifetime free demat account?

      While AMCs may be waived, brokers can still charge transaction fees, pledging fees, etc. Always review the fee structure of the Depository Participant (DP) before opening an account.

    3. Can I hold all types of securities in a lifetime free demat account?

      You can hold stocks, mutual funds, bonds, and other financial instruments in a Demat account.

    4. Can I close my lifetime free demat account at any time?

      Yes, you can close your account whenever you choose.

    5. Why do the brokers charge AMCs?

      Brokers charge AMCs to cover their operational costs, such as maintaining technological infrastructure, providing customer support, etc.

  • BSDA – What is a Basic Service Demat Account?

    BSDA – What is a Basic Service Demat Account?

    A Basic Service Demat Account (BSDA) is a more affordable version of a regular demat account as it is designed for investors with limited trading activity. It also allows individuals to hold and manage their securities, such as stocks, mutual funds, and in electronic form. BSDA accounts have a lower annual maintenance, which makes them cost-effective for small investors. 

    To be classified as a BSDA, the value of securities held in the account must be below INR 10 lakhs. The limit was increased to INR 10 lakhs from INR 2 lakhs by SEBI on 28 June 2024. This account is ideal for new investors who want to start their journey in the stock market without incurring high fees while still enjoying the essential dematerialization services. In this blog, we will provide information about the BSDA Account, its features, associated charges, and the eligibility criteria for opening one.

    What is a BSDA?

    BSDA full form is Basic Service Demat Account, and it is a specialized type of demat account aimed at promoting the equity market participation among small investors. The BSDA was introduced in 2012  to allow individuals to hold their securities in an electronic format while keeping costs low. The BSDA focuses on providing basic services without the high fees associated with regular demat accounts.

    One of the key features of a BSDA demat account is its low annual maintenance fee, which makes it ideal for new investors or those who trade infrequently. To qualify for this account, the investors must maintain a maximum balance of up to INR 10 lakhs in their demat account. The limit was set to ensure that the benefits of the BSDA scheme reach the target audience.

    This account provides essential services such as holding the shares, mutual funds, and other securities and facilitates easy transfers. For those who are interested in opening a BSDA account, choosing the best stock broker is crucial. A reliable broker will offer user friendly platforms, competitive pricing, quality customer support and ensure a seamless investing experience for investors. Overall, the BSDA account encourages individuals to invest in the stock market while minimizing the costs. 

    Read Also: Demat Account Charges Comparison 2025

    Features Of Basic Service Demat Account

    The Basic Service Demat Account (BSDA) is designed to facilitate low-cost investment for small investors in the stock market. The BSDA account offers the several attractive features under the BSDA scheme, making it an appealing choice for the new investors.

    • One of the primary features of a BSDA is its low annual maintenance, which is significantly lower than regular demat accounts. The investors don’t have to pay any charges if the holdings are worth less than INR 4,00,000 and are charged INR 100 + 18% GST if the holdings value is between INR 4,00,000 and INR 10,00,000. The BSDA encourages small investors by providing basic Demat services without excessive charges.
    • Moreover, a BSDA account enables investors to enjoy essential services such as the transfer and pledge of securities and provides a secure and efficient way to manage investments.

    For individuals looking to open a BSDA account, selecting the best stock broker is essential. A top broker will offer a user friendly platform, effective customer support, and reliable services to enhance the overall investing experience. 

    Who is eligible to open a BSDA?

    To open a Basic Service Demat Account (BSDA), individuals must meet specific eligibility criteria. 

    1. The applicant should be a resident of India and at least 18 years old.
    2. The BSDA scheme is designed for small investors, so to qualify, the total market value of securities held in the account should not exceed Rs 10 lakhs at any time.
    3. Additionally, an individual can open only one BSDA across all depositories. Moreover, the investor must not have any other Demat account.

    What are the limitations of a BSDA?

    The Basic Service Demat Account (BSDA) has specific limitations such as: 

    1. To qualify for a BSDA account, the total market value of securities held should not exceed Rs 10 lakhs at any point in time. This limit ensures that the benefits of the BSDA scheme reach its intended audience and new small investors.
    2. Additionally, an individual can maintain only one BSDA account.
    3. If the market value of securities exceeds Rs 10 lakh, the account will be converted into a regular demat account and will be subject to standard fees and charges. 

    What are the Charges levied on BSDA?

    The charges levied on a Basic Service Demat Account (BSDA) are generally lower than those on a regular demat account. This fee structure is as per the circular released by SEBI on 28 June 2024. The fee structure is as follows:

    Value of Holdings held in Demat AccountMaximum Annual Maintenance Charges (AMC)
    Up to INR 4,00,000Nil
    INR 4,00,001 to INR 10,00,000INR 100 + GST
    More than INR 10,00,000Regular Demat Account charges

    Read Also: How to Use a Demat Account?

    How to Open a Basic Service Demat Account?

    Opening a Basic Service Demat Account (BSDA) is a straightforward process, as mentioned below:

    1. Choose a reliable stockbroker that offers BSDA services and visit their website or branch to obtain the application form. 
    2. Complete the form with the necessary details, including personal and financial information. 
    3. Along with the application, submit the required documents such as identity proof (Aadhar and PAN card), address proof, and a recent passport sized photograph.
    1. After submission, complete the Know Your Customer (KYC) process.
    2. Once approved, you will receive your BSDA account details, enabling you to start your investing journey. 
    Opening a Basic Service Demat Account

    How do I convert my Demat Account to a BSDA?

    To convert your existing Demat Account to a Basic Service Demat Account (BSDA), follow the simple steps mentioned below. 

    1. Check if your account meets the BSDA eligibility criteria, i.e., whether the total market value of your securities does not exceed Rs 10 lakhs. 
    2. Contact your Depository Participant (DP) to understand the conversion process.
    3. You may need to fill out a conversion form provided by them. Provide necessary documents, such as a request letter, a declaration, and details of your existing Demat Account.
    4. Once your request is processed and approved, then your account will be converted to a BSDA. The investor receives a confirmation from the DP stating that the account has been successfully converted. 

    Read Also: Types of Demat Accounts in India

    Conclusion

    Converting your Demat Account to a Basic Service Demat Account (BSDA) is a beneficial step for small investors who are seeking to minimize costs while enjoying the essential dematerialization services. You can minimize costs by meeting the eligibility criteria and following the conversion process. The BSDA offers low annual maintenance fees, and it is designed to encourage participation in the stock market. As you transition to a BSDA, ensure you monitor your account’s market value to maintain compliance. This conversion to a BSDA can pave the way for a more cost-effective and efficient investment journey. 

    Frequently Asked Questions (FAQs)

    1. What is a Basic Service Demat Account (BSDA)?

      A BSDA is a specialized type of Demat account that is designed for small investors. It allows the individuals to hold securities in an electronic format with lower fees as compared to regular demat accounts and promotes participation in the stock market.

    2. What are the eligibility criteria for opening a BSDA?

      To open a BSDA, the investor must be a resident Indian, at least 18 years old, and the total market value of securities held should not exceed Rs 10 lakhs at any time. Additionally, an individual can maintain only one BSDA.

    3. What charges are associated with a BSDA?

      BSDA accounts generally have the lowest charges, with a maximum annual maintenance fee of Rs 100.

    4. How can I convert my existing Demat Account to a BSDA?

      To convert your Demat Account to a BSDA, contact your stockbroker and follow the conversion process. Ensure your account meets the eligibility criteria, fill out the required forms and submit any necessary documentation. The broker verifies and approves the request if the applicant meets the eligibility criteria.

    5. Can I hold multiple BSDA accounts?

      Individuals can only have one Basic Service Demat Account. 

  • How to Find Demat Account Number from PAN?

    How to Find Demat Account Number from PAN?

    Are you an investor in the Indian equity market and are trying to find your demat account number? A Demat account number is a unique 16-digit code assigned to each Demat account. It is a combination of DP ID and Client ID.

    In this blog, we will discuss how to find the Demat account number using the PAN card and the significance of having a PAN Card in your Demat account.

    What is the Demat Account Number?

    The Depository Participant or DP, working with Central Depository Services (India) Limited (CDSL) or National Securities Depository Limited (NSDL), assigns a unique identifier to each demat account when you open one. The Demat Account number can uniquely identify the Demat account holding stocks, bonds, and other securities kept in electronic form. 

    The significant features of the demat account number are as follows –

    1. Unique Number – The demat account number is a unique 16-digit number that guarantees accurate tracking of securities. 

    2. Access – You will need this number to get access to your Demat account.

    3. Issuing Authority– The depository participants partner with NSDL and CDSL and issue the Demat Account number.

    4. Role – A Demat account number is used for accurate settlement of buy, sell, and transfer transactions.

    How to Create a Demat Account Online?

    The procedure for opening a Demat account online is easy and quick. The steps to do so are as follows: 

    1. Choosing a Broker – Choosing the right broker for you is the first step, which can be accomplished by comparing the services provided by different brokers. 

    2. Visiting the Website – Visit the depository participant’s website and click “Open an Account Online” or “Open a Demat Account” on the webpage. 

    4. Entering your Details – Enter your email address, mobile number, and PAN card information. 

    5. Verification – To confirm the information, an OTP will be sent to the email address and mobile number.

    6. Filling the Form – Fill the form with the information mentioned below.

    • Personal Details – Enter personal information, like your name, address, phone number, etc. 
    • Financial Details – You will be prompted to provide your financial information, including your occupation and income bracket. ‘
    • Nominee Details – Submit the nominee’s information. Nominees will receive securities held in the Demat account in the event of an investor’s untimely death.
    • Bank Details – You must upload the bank’s details to transfer money, receive dividends, and receive payouts from your demat account. 
    • Uploading Documents –  An essential stage in opening a Demat account online is uploading supporting documentation, such as proof of identity, proof of address, bank account information, etc. 
    • Preview of Application – Check your completed application before moving on to the last step. If you discover any errors, fix them before continuing. 
    • E-sign – You must e-sign the application using the Aadhaar OTP you will receive on your mobile phone. 
    • Login Details – You will receive your Demat account details after all procedures have been completed and the DP verifies the information.  

    Read Also: How to Check Demat Account Status or Balance?

    How to Find a Demat Account Number?

    There are several ways to locate one’s Demat account number, which are listed below.-

    1. Trading Account – You may quickly check your demat account number by going to the profile section of your trading account. 

    2. Depository Website – The depository participant’s website allows users to log in with their credentials, access their Demat account, and locate their Demat account number. 

    3. Welcome Letter – Your demat account number is included in a welcome letter sent to you via email or postal mail by your broker or depository participant once you open a demat account. 

    4. Statements – Depository participants send monthly or quarterly statements of your demat account’s holdings and transactions. These statements contain your Demat Account Number.

    5. Customer Support – You can get your demat account number by contacting the DP’s customer service. 

    How to Check a Demat Account Number from PAN?

    The following are the fundamental procedures to verify a demat account number from a PAN: 

    1. Visit the depository participant’s website.
    2. Download the application form, fill it out, and provide your PAN as verification.
    3. After finishing this procedure, you must submit a scanned copy of your identity and residence proofs and finish the KYC process.
    4. The brokerage firm will conduct due diligence at their end.
    5. After filling in your details, complete the two-factor authentication process to confirm your phone number and email address.
    6. Then, you will be required to validate your bank account details and ECS payment methods.
    7. After completing all the steps mentioned above, you will receive an email with your Demat Account number on your registered email ID.
    Check a Demat Account Number from PAN

    Importance of a PAN Card in a Demat Account

    A PAN Card is mandatory to open a demat account in India. It is of significant importance due to the points mentioned below-

    • Simplifies Tax Filings – Through a PAN Card, all your transactions related to securities can be easily tracked, simplifying the process of calculating gains and filing income taxes.
    • No Duplication – If your PAN Card is linked to your Demat Account it ensures that no duplicate accounts are opened in your name and prevents fraud.
    • Consolidate Account Statement – A PAN Card is generally used to generate a Consolidated Account Statement (CAS), which provides you with a detailed overview of your holdings across different Demat accounts.
    • IPOs & Corporate Actions– Having a PAN Card linked to your demat account is essential to apply for an IPO and corporate actions such as dividends, right issues, etc.

    Advantages of PAN Card linked with a Demat Account

    The major advantages of having a PAN Card linked with a Demat Account are as follows-

    • Authorization – The transactions can easily be authorized as a PAN Card serves as an identity proof of the account holder.
    • Validation of Tax Return– Generally, a bank account, Aadhar card, or digital key is used to validate your tax returns. This is only feasible if you have a demat account linked with your PAN Card.
    • Bond Purchases – Investors can purchase gold bonds and other government bonds directly in a demat account by providing both PAN card number and demat account number.
    • Loan against Securities – If your PAN Card is linked with your demat account, you can easily take loans on behalf of your holdings.
    • Transparency – A PAN Card linked with your Demat Account makes your investment activities transparent and ensures proper reporting to tax authorities.

    Read Also: How to Download Your Demat Holding Statement?

    Conclusion

    Keeping a record of your Demat Account number is crucial, but you can retrieve it easily with the help of your PAN card. A PAN Card is crucial if you want to invest in the Indian Securities Market because it offers a range of advantages for investors, such as easier tax filings, bond purchases, loans against securities, etc. 

    Frequently Asked Questions (FAQs)

    1. Can a person hold two demat accounts with the same PAN?

      Yes, a person can have two demat accounts with the same PAN Card.

    2. How do you check the number of demat accounts a person has?

      Visit the depository’s website, select the CAS option, and request a CAS by entering all the required details. CAS includes details of all your demat accounts.

    3. Can Income Tax authorities help me identify the demat account number?

      No, Income Tax authorities cannot help you identify the demat account number.

    4. How many digits does a Demat Account Number contain?

      A demat account number consists of 16 digits. In NSDL, the number begins with “IN,” followed by a 14-digit number, while in CDSL, it is a 16-digit number.

    5. Is it safe to share the Demat Account Number?

      Sharing your Demat Account number with someone other than your DP, CDSL, or NSDL is not advised.

  • Tax Implications of Holding Securities in a Demat Account

    Tax Implications of Holding Securities in a Demat Account

    Since the introduction of Demat Accounts, investors have been enjoying its various benefits, such as protection against theft, reduced paperwork and easy settlement of transactions. However, there are several tax implications of holding securities in a Demat account.

    Understanding the tax implications of demat accounts in India is crucial for identifying the tax liabilities and remaining tax-compliant when holding securities in demat accounts. Knowledge about how the investments will be taxed helps investors make better investment decisions. In this blog, we will discuss the tax implications of holding securities in a Demat account in detail.

    What are the Tax Implications on a Demat Account?

    Tax Implications on Demat Account

    The tax implications of a demat account are the applicable taxes on short and long-term capital gains, dividend income, and other transaction costs related to securities held in a Demat account. These are applicable when you buy or sell equities, mutual funds, bonds, or other financial instruments kept in your Demat account. Here’s a detailed overview of the tax implications:

    1. Capital Gains Tax

    Capital gains are classified as either short-term or long-term, depending on the holding period. According to the Budget 2024, there will be only two holding periods: 12 months for listed securities and 24 months for unlisted securities

    A. Short-Term Capital Gains (STCG)

    • Listed Equity Shares & Equity-Oriented Mutual Funds: The gains are considered short-term if security is sold within 12 months of the purchase. STCG is taxed at a flat rate of 20%, regardless of your income tax slab.  
    • Other Assets: For other assets such as real estate, unlisted equity shares, specified mutual funds, etc., the gains are taxed at your income tax slab rate. Specified mutual funds are more than 65% of assets invested in debt and money market securities, and the gains realized are categorized as STCG.

    B. Long-Term Capital Gains (LTCG)

    • Listed Equity Shares & Equity-Oriented Mutual Funds: Gains from shares or equity mutual funds held for more than 12 months are classified as long-term. LTCG is exempt from taxes up to 1.25 lakh per financial year. Gains exceeding 1.25 lakh are taxed at 12.5%.
    • Other Assets: For other assets, LTCG is taxed at 12.5% without indexation benefit for transfers made on or after 23 July 2024.

    2. Dividend Income

    • From FY 2020-21 onwards, dividends received from shares and mutual funds are added to your total income and taxed according to your income tax slab.
      • TDS on Dividends: A 10% TDS is deducted if the dividend income exceeds ₹5,000 in a financial year. For NRIs, the TDS on dividends is 20%.

    3. Securities Transaction Tax (STT)

    • STT is a tax levied on the purchase and sale of securities. On the sale and purchase of equity shares, STT is 0.1% of the transaction value, and on the purchases or sale of equity-oriented mutual funds, STT is 0.001%.
    • STT is not deductible from the sale price.

    4. Tax-Free Bonds

    • The interest earned from these bonds is fully exempt from tax, making them a good option for tax-saving investments.

    5. Capital Losses

    • Short-Term Capital Loss (STCL): These can be set off against both short-term and long-term capital gains in the same year.
    • Long-Term Capital Loss (LTCL): These can only be set off against long-term capital gains.
    • Carry Forward: If capital losses cannot be fully utilized in the current year, they can be carried forward for up to 8 years to offset future gains.

    6. Transaction Costs and Brokerage

    • Brokerage fees and other transaction costs incurred while buying or selling shares can be deducted from the sale price when calculating capital gains. However, annual Demat account maintenance fees are not deductible.

    7. Bonus Shares and Rights Issues

    • Bonus Shares: When bonus shares are sold, their cost of acquisition is considered zero, and the sale proceeds are fully taxed as capital gains (either short-term or long-term, based on the holding period).
    • Rights Issues: When shares are purchased through a rights issue and sold within 1 year, the gains are subject to short-term capital gains tax (15%).

    8. Gifting Shares

    • Gifting shares or securities is not taxed. However, if the recipient sells the shares, they will be liable to pay tax on the capital gains. For capital gains calculation, the original purchase price and holding period of the person who gifted the shares are considered.

    9. REITs and INVITs

    • If you hold Real Estate Investment Trusts (REITs) or Infrastructure Investment Trusts (InvITs) in your Demat account, dividends may be tax-exempt under certain conditions.
    • Capital gains from the sale of REIT or InvIT units are taxed just like shares: short-term gains at 20% and long-term gains at 12.5% after holding for over 1 year.

    Understanding these tax implications is important to plan your investments more effectively and minimize tax liability when using a Demat account.

    Tax on Gains Made over a Longer Term

    Type of InvestmentHoldingPeriod (Long-Term)Tax on Long-Term Gains
    Equity Shares & Equity Mutual FundsMore than 1 year12.5% on gains exceeding ₹1.25 lakh (₹1.25 lakh exemption per year)
    Debt Mutual FundsMore than 3 yearsIncome Tax slab rate
    Non-Equity AssetsMore than 3 years12.5%
    DividendsN/ATaxed at applicable income slab rate; TDS of 10% on dividend income > ₹5,000

    In summary, long-term holding of investments through a Demat account can provide substantial tax benefits, especially when taking advantage of LTCG exemptions and indexation benefits for non-equity investments. One can Plan and time the investments to maximize exemptions and offset capital losses, further minimizing your tax liability.

    Summary of Short-Term Tax Implications

    Type of InvestmentHolding Period (Short-Term)Tax on Short-Term Gains
    Equity Shares & Equity Mutual FundsLess than 1 year20% flat tax rate, irrespective of income tax slab.
    Non-Equity (Debt Funds, Gold ETFs, etc.)Less than 3 yearsTaxed at your income tax slab rate 
    DividendsN/ATaxed at your applicable income tax slab rate; TDS of 10% on dividend income > ₹5,000/year.
    Bonus Shares (sold within 1 year)Less than 1 yearEntire sale proceeds taxed as STCG at 20% (since the acquisition cost is zero).
    Rights Issues (sold within 1 year)Less than 1 yearGains taxed as STCG at 20%.
    Offset Short-Term LossesN/ACan be set off against both STCG and LTCG; carried forward for up to 8 years.

    Read Also: How to Download Your Demat Holding Statement?

    How to Save Tax using a Demat account?

    Maximizing Tax Savings with Strategic Demat Account Investments

    Using a Demat account in India can indirectly help save taxes by facilitating investments in tax-saving instruments. Here’s how you can leverage a Demat account to reduce your tax liability:

    1. Investing in Equity-Linked Saving Schemes (ELSS)

    • ELSS funds are mutual funds that invest in equities and offer tax benefits under Section 80C of the Income Tax Act. Investments up to ₹1.5 lakh per financial year are eligible for deduction, but ELSS has a lock-in period of 3 years, which is the shortest among all tax-saving instruments under Section 80C.

    2. Capital Gains Exemption

    • Long-Term Capital Gains (LTCG) on equities and equity mutual funds (held for more than 1 year) are exempt from tax up to ₹1.25 lakh per year. Any gain beyond ₹1.25 lakh is taxed at 12.5%.
    • Short-Term Capital Gains (STCG) on equities are taxed at 20% if the holding period is less than 1 year.

    3. Tax Benefits through Systematic Investment Plans (SIP)

    • One can enjoy tax benefits under section 80 C on SIPs in ELSS.

    4. Dividend Income

    • Earlier, it was tax-free, but since FY 2020-21, dividends have been taxable as per the investor’s income tax slab.

    5. Tax Loss Harvesting

    • Short-term capital losses can be set off against both short-term and long-term capital gains, whereas long-term capital losses can be set off only against long-term capital gains. These losses can be carried forward for up to 8 years to offset future gains.

    6. Investing in Tax-Free Bonds

    • You can use your Demat account to invest in tax-free bonds issued by government entities. The interest earned on these bonds is fully exempt from tax.

    7. Avoid Frequent Trading

    • Avoid frequent trading, as short-term capital gains are taxed at 20%. By holding investments for the long term (more than 1 year), you can qualify for lower tax rates on long-term capital gains.

    8.  Tax Deductions on Brokerage and Transaction Costs

    • Brokerage fees and other transaction costs can be used to reduce the overall capital gains liability.

    You can optimize your tax savings by strategically using your Demat account for tax-saving investments and planning capital gains.

    Tax Planning and Strategies for Demat Account Holders

    Comprehensive Tax Planning for Demat Account Holders

    Tax planning for Demat account holders in India involves utilizing available exemptions and deductions to minimize tax liabilities. Here’s a breakdown of effective tax planning and strategies for Demat account holders:

    1. Optimize Long-Term Capital Gains (LTCG)

    • LTCG on Equity: When you sell shares or equity / mutual funds after holding them for more than 1 year, you qualify for long-term capital gains (LTCG). LTCG up to ₹1.25 lakh is exempt from tax in a financial year. Beyond that, LTCG is taxed at 12.5%. Avoid short-term trading (holding for less than 1 year) as short-term capital gains (STCG) are taxed at 20%.

    2. Tax Loss Harvesting

    • Tax loss harvesting is the strategy of selling assets in your Demat account that have incurred losses. These losses can be used to offset capital gains, reducing your taxable gains; they can also be carried forward for up to 8 years to offset future capital gains.
    • Set-off rules:
      • Short-term capital losses (STCL) can be set off against both short-term and long-term capital gains.
      • Long-term capital losses (LTCL) can only be set off against long-term capital gains.

    3. Utilize Section 80C Investments

    • Invest in Equity-Linked Saving Schemes (ELSS) to qualify for a deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act.
    • ELSS funds have a lock-in period of 3 years but provide both tax benefits and potential equity market returns.

    4. Systematic Investment Plans (SIPs) in ELSS

    • Spread your investment in ELSS funds throughout the year by using a Systematic Investment Plan (SIP). This allows you to take advantage of market volatility and gain Section 80C benefits while accumulating wealth over time.

    5. Invest in Tax-Free Bonds

    • You can buy tax-free bonds (issued by government-backed entities) through your Demat account. The interest income earned from these bonds is fully exempt from tax.

    6. Diversify with Dividend Payout Plans

    • Dividend income is taxable as per the individual’s tax slab. One should consider dividend yield stocks if your tax slab is lower.

    7. Tax Planning with Derivatives and Commodities

    • If you invest in derivatives (futures and options) or commodities, the gains are considered business income rather than capital gains. This can provide tax benefits as you have expenses (such as brokerage fees, Demat charges, etc.) to offset against the income.

    8. Avoid Frequent Trading (Minimize STCG)

    • Engaging in frequent buying and selling of shares leads to short-term capital gains (STCG), taxed at 20%, which is higher than the 12.5% on LTCG.
    • Strategy:
      • Hold your investments for the long term to reduce tax liability.
      • If frequent trading is your strategy, plan your trades carefully with a higher risk-reward ratio to offset the higher tax rate for the short term.

    9.  Gifting Shares to Family Members

    • Gifting shares to family members (e.g., spouse/ and children) can help distribute tax liability, especially if they fall in lower tax brackets or have no other significant income.

    10.  Consider Investing in REITs and INVITs

    • Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (INVITs) can provide income in the form of interest, dividends, and capital gains. Dividends from REITs and INVITs are exempt from tax in certain cases, while interest income is taxed as per the individual’s tax slab.

    Reporting Demat Account in ITR

    Here is a table format outlining how to report a Demat account in ITR in India, the applicable forms, exemptions, credits, and other related details:

    Type of Income/TransactionWhere to Report in ITRApplicable ITR FormExemptions AvailableCredits/Deductions Available
    Short-Term Capital Gains (STCG)Schedule CG (Capital Gains)ITR-2 / ITR-3No exemptionsSet off short-term capital losses (STCL)
    Long-Term Capital Gains (LTCG)Schedule CG (Capital Gains)ITR-2 / ITR-3₹1.25 lakh LTCG exemption (on equity shares & mutual funds)Set off long-term capital losses (LTCL)
    Dividend IncomeSchedule OS (Other Sources)ITR-1 / ITR-2 / ITR-3No exemption; fully taxable at slab rateTDS credit if 10% TDS deducted for dividends
    Interest from Tax-Free BondsSchedule EI (Exempt Income)ITR-2 / ITR-3Fully exemptNot applicable
    Bonus SharesSchedule CG (Capital Gains)ITR-2 / ITR-3No exemptionsNot applicable (Zero acquisition cost)
    Rights IssuesSchedule CG (Capital Gains)ITR-2 / ITR-3No exemptionsDeduct the cost of purchase of rights shares
    Capital LossesSchedule CFL (Carry Forward Losses)ITR-2 / ITR-3Not applicableCarry forward losses up to 8 years
    REIT/InvIT DividendsSchedule OS (Other Sources) or EI (Exempt Income)ITR-2 / ITR-3Exempt if eligibleNot applicable
    Securities Transaction Tax (STT)Not Reported Separately (Impacts CG)ITR-2 / ITR-3Not applicableNot deductible, but required for claiming concessional rates (20% STCG, 12.5% LTCG)
    Demat Account Maintenance FeesNot applicableAll FormsNot exemptNo deduction allowed.

    By reporting capital gains, dividends, and other related incomes accurately in the relevant schedules and forms, you ensure compliance and can claim appropriate exemptions and deductions.

    Conclusion

    In summary, long-term holding of investments through a Demat account can provide substantial tax benefits, especially when taking advantage of LTCG exemptions and tax-free bond income. One can plan and time the investments to maximize exemptions and offset capital losses, which can further minimize your tax liability. In conclusion, short-term investments through a Demat account are subject to a higher tax rate, and careful planning around capital gains, dividends, and transaction costs can help minimize tax liabilities.

    Frequently Asked Questions (FAQs)

    1. What are the tax implications of bonus shares or rights issues?

      For bonus shares, the cost of acquisition is considered zero. When it is sold, all proceeds are taxed as capital gains. For rights issues, the cost of acquisition is the amount paid to purchase the shares. The tax treatment depends on the holding period (short-term or long-term capital gains).

    2. Can capital losses be adjusted or carried forward to reduce tax liability?

      Yes, capital losses can be used to offset gains. Short-term losses can be set off against both short-term and long-term capital gains. On the other hand, long-term losses can only be set off against long-term capital gains. Unadjusted losses can be carried forward for up to 8 years.

    3. Are the annual maintenance charges of a Demat account tax-deductible?

      No, these charges are not tax-deductible.

    4. What are the changes introduced in Budget 2024 related to LTCG?

      According to Budget 2024, long-term capital gains will be taxed at 12.5%, and the exemption limit has been increased to INR 1.25 lakhs.

    5. What are the changes introduced in Budget 2024 related to STCG?

      According to Budget 2024, the tax rate on short-term capital gains has been increased from 15% to 20%.

  • Eligibility Criteria to Open a Demat Account

    Eligibility Criteria to Open a Demat Account

    India’s economy has expanded rapidly in recent years and is on track to reach $5 trillion. If you want to participate in the nation’s development, you must invest in Indian companies listed on the Indian stock market. A Demat account is a necessity for investing in the Indian stock market. However, having knowledge about the eligibility criteria for opening a demat account is crucial.

    In this blog, we will provide an overview of the eligibility criteria and other requirements for opening a demat account.

    Who is Eligible to Open a Demat Account?

    A complete list of those eligible to open a Demat account is provided below:

    • Resident individuals
    • NRI or Non-Resident Individuals
    • Private Companies
    • Hindu Undivided Families
    • Trusts
    • Minors who are below 18 years of age

    Read Also: How to Open a Demat Account Online?

    Documents Required to Open the Demat Account

    Documents Required to Open the Demat Account

    The basic documents required for opening a demat account are as follows;

    1. PAN Card – A PAN card is a mandatory document to open a Demat account.

    2. The Identity Proof– To open a demat account, the depository participant (DP) requires identity proof such as a driver’s license, passport, voter ID card, Aadhar card, or other Indian government-authorized IDs.

    3. Address Proof – Submit documents with your residential address for address verification, such as an Aadhaar card.

    4. Bank Details – To transfer money from your bank account to your demat account, you must attach your bank account to your demat account. Provide a canceled check or a recent bank statement that includes your name, account number, and IFSC Code. 

    5. Income Proof – To trade in the derivatives market, you must provide proof of income. Your ITR, salary slip, and bank statement can be used as proof of income.

    Read Also: Documents Required to Open a Demat Account

    Who Can Hold a Demat Account?

    Demat Account Holders Individuals and Non-Individuals

    Both individuals and non-individuals can hold a Demat account according to the regulations specified by the Securities and Exchange Board of India. A list is mentioned below:

    1. Individual – The individual category will include.

    • Resident Individuals.
    • Non-Resident Individuals
    • Minors

    2. Non-Individuals – The non-individual category will include.

    • Corporates
    • Partnership Firms
    • Banks
    • Mutual Funds
    • Limited Liability Partnerships
    • Registered Trusts
    • Unregistered Trusts
    • Registered Societies
    • Unregistered Societies
    • Foreign Institutional Investors or Foreign Portfolio Investors

    Read Also: Types of Demat Accounts in India

    Benefits of a Demat Account

    A Demat account has several advantages, some of which are listed below.-

    • Safety of Securities – Since a demat account enables us to hold securities digitally, there is no longer any chance of theft, physical damage, or fraud.
    • Efficient Transactions – A Demat account allows an individual to quickly buy and sell securities held in their account.
    • Convenience – A Demat account allows an investor to easily access their securities at any time, anywhere.
    • Monitoring of Investments – Holding assets in a demat account makes it simple to monitor the investment performance.
    • Less Paperwork – A demat account reduces the need for extensive paperwork.
    • Nomination – Investors can appoint a nominee in a demat account, which ensures that the assets can be easily transferred to the nominee in the case of the unfortunate death of the account holder.
    • Corporate Actions – Companies declare dividends, bonuses, rights issues, and other corporate actions, which are updated automatically in the Demat account.
    • Consolidation of Investment – A demat account helps consolidate all your investments, such as stocks, bonds, mutual funds, ETFs, etc., in one place.
    • Loan Against Securities – If you have securities, such as mutual funds, stocks, etc., in your demat account, you can easily pledge them and take out loans against them.

    Read Also: How to Find Demat Account Number from PAN?

    Conclusion

    In conclusion, having a demat account offers several advantages, making it a valuable tool for Indian citizens, corporations, trusts, minors, etc., looking to invest in the Indian stock market. However, the documents required can vary for different investor categories. You can invest from the comfort of your home by opening a Demat account with Pocketful.

    Frequently Asked Questions (FAQs)

    1. What is the minimum amount required to open a demat account?

      There is no minimum amount required to open a Demat account. However, some brokers charge account opening fees.

    2. Who can open a trading and demat account?

      Any resident or non-resident person, corporate entity, or minor can open a Demat account.

    3. Can I open a demat account without providing proof of income?

      If you simply want to invest in stocks, ETFs, etc., you can open a demat account without providing proof of income. However, you must provide proof of income if you want to trade in the derivatives market. 

    4. How many joint holders can be added to a demat account?

      A joint demat account can be opened by a maximum of three account holders. 

    5. Can I open multiple demat accounts with the same broker?

      Opening more than one Demat account with the same broker is prohibited. 

  • Demat Account Nomination – How to Add a Nominee?

    Demat Account Nomination – How to Add a Nominee?

    At times, investors get concerned about what would happen to the securities in their demat account if they passed away and is there a procedure they can follow to transfer the stocks to a family member? The answer to that query is “Nominee.” Investors can designate a nominee in their demat account so that in the event of an investor’s untimely death, the nominee will have easy access to the securities held in the investor’s demat account.

    In this blog, we will explain how to appoint a nominee for your demat account.

    Who is the Nominee?

    In a Demat account, the nominee is a person designated by the account holder to inherit the securities in the account in the event of the account holder’s unfortunate death. The nominee facilitates the transfer of the asset without probate or formal succession. Adding a nominee to the demat account is advised because it makes transferring the securities held in the demat account easier. If an account holder passes away, the nominee serves as a custodian with the power to administer the securities kept in the demat account.  

    What is Nomination in Demat Account?

    The process of appointing a nominee by the Demat account holder is known as nomination. A nominee is a person who would inherit the securities, such as shares, bonds, etc., in the event of the account holder’s death. A nominee must be appointed whenever a demat account is opened. It is necessary for the asset transfer to go smoothly. In the event of the account holder’s untimely death, having a nominee in a demat account prevents the situation of unclaimed assets. 

    Read Also: Features and Benefits of Demat Account

    Importance of Adding a Nominee in Demat Account

    The key points signifying the importance of having a nominee in a Demat account are mentioned below-

    • Easier Asset Transfer – In the event of the account holder’s untimely death, having a nominee in a demat account enables quick and easier transfer of the assets. 
    • Protects against uncertainty – Adding a nominee to the demat account reduces the possibility of a dispute involving the transfer of the account holder’s securities. 
    • No Additional Cost – No extra fees are associated with adding a nominee to the demat account. 
    • No Freezing of Account – The SEBI has released a circular to freeze the Demat accounts for debits if the nominee is not updated in the Demat account. Appointing a nominee prevents such situations.
    • Distribution of Asset – You can designate up to three individuals as nominees, making it simple to divide the asset among family members. 
    • Saves Time – Designating a nominee in the demat account relieves the legal heirs of the burden of going through a legal procedure. 
    • Peace of Mind – You can feel secure knowing your assets will be passed on to the family member you specified in the nomination.  

    Read Also: How to Open a Demat Account Online?

    How to Add a Nominee to a Demat Account Online?

    Adding a Nominee to Demat Account

    The steps to add a nominee to a demat account online are as follows-

    1. Visiting the Website – Visit the NSDL or CDSL website and select the ‘Nominate Online’ option.

    2. Enter the Details – You will be redirected to a new webpage where you will be asked to enter various details, such as your Depository Participant ID, client ID, and PAN card.

    3. Authentication – An OTP will be sent to your registered mail ID and mobile number, and you must enter that OTP to complete the authentication process.

    4. Nomination – There will be two options available. If you wish to add a nominee, select the ‘I wish to nominate’ option and provide the nominee’s details on the next page. The other option is “Opt out of the Nomination” if you don’t wish to appoint a nominee for your demat account. 

    5. Authenticating the Nominee Details – After that, you must authenticate the nominee’s details by clicking on the checkbox.

    6. Esign– The last step is to sign the documents, which can be completed through e-sign service providers.

    7. Service Provider – You will be redirected to the Protean eGov page, where you must perform an Aadhaar Esign.

    8. Submission – The nomination process is completed once you enter the OTP received on your Aadhaar-registered mobile number.

    Read Also: HUF Demat Account: Benefits, Documents & How to Open

    How to add a Nominee in a Demat Account Offline?

    The nominee can be easily added to your demat account through offline mode, the steps of which are as follows-

    1. Get the Form – The first step would be getting the nomination registration form. Get the Form No. SH-13 Nomination form from the branch of your depository participant or SEBI website.

    2. Details – Fill out the nomination form with details such as the nominee’s name, address, relationship with you, and the percentage of assets that would be transferred to the nominee in the event of the investor’s death. Make sure that the details provided are accurate.

    3. Signing the Form – The account holder must sign the nomination form, and if there are two joint holders, then all the account holders must sign it.

    4. Submission of Form – The form can be submitted to the nearest branch of your depository participant.

    5. Receipt of Acknowledgment – The depository participant issues an acknowledgment slip that must be kept for future reference.

    6. Confirmation – Once your form is accepted and processed, the depository participant will update the nominee details in your demat account.

    Read Also: Types of Demat Accounts in India

    Eligibility Criteria for Nominees

    The demat accounts have flexible eligibility criteria for nominees; below mentioned are the key eligibility criteria –

    • Individual – Regardless of age, a person can be designated as a nominee in a demat account. However, the guardian must be appointed if the nominee is a minor. 
    • Minor – A minor can also be designated as a nominee in a demat account. However, in this scenario, the minor’s guardian will manage the account in the event of the account holder’s death until the minor turns 18. 
    • NRI – It is also possible to designate a non-resident Indian as a nominee in a demat account. 
    • Legal Entities – Legal entities, such as companies, trusts, or partnership firms, are not allowed to be appointed as nominees.
    • Joint Account Holders – If there are two or more joint holders, the nominee can only exercise their entitlement if both joint holders pass away. The demat account will continue to be operated if any of the joint holders are still living.  

    Read Also: NSDL Demat Account: Open, Manage & Understand Charges

    How to Update/Change Demat Account Nominee?

    The nominee in the Demat account can be updated through both online and offline methods-

    Online Mode

    1. Visit the Website – Go to the NSDL website and then navigate to the main page. 
    2. Selecting the Nomination Option – Choose the online nomination option on the main page. 
    3. Enter the Details – You will then be taken to a new page where you will be required to provide several details, including your PAN card and Depository Participant ID. 
    4. Authentication – You will receive an OTP on your registered email address and mobile number. Input it to finish the authentication procedure. 
    5. Edit or Update Nominee – If you want to change or amend the nominee in the Demat account, enter the new nominee’s information on the following page. 
    6. Authenticating the Nominee Details – You can update the nominee’s details by entering the OTP sent to your registered mobile number and email ID.
    7. Submission – Enter the OTP received on your Aadhar registered mobile number to submit the form.

    Offline Mode 

    1. Get the Form – Obtain the nomination form. Form SH-14 is the “Cancellation or Variation of Nomination” form, available on the NSDL or CDSL websites. The form is also available at the nearest branch of your Depository Participants. 
    2. Account Details – Complete the form with account details such as the demat account number, the account holder’s name, and other information. 
    3. Existing Nominee Details – Input details regarding the nominee’s name, birthdate, relationship to the account holder, contact details, and other information. 
    4. In Case of Minor – If the nominee is a minor, the guardian’s name, relationship, and contact information must also be provided. 
    5. New Nominee Details – Write the details of the new nominee in the form.
    6. Signing the Form – The account holder must sign the nomination form, and if there are two joint holders, all the account holders must sign the form. 
    7. Submission of Form – Submit the form at the nearest branch of your depository participant.
    8. Receipt of Acknowledgment – The acknowledgment given by the depository participant must be kept for future reference to track the process of change in nomination.
    9. Confirmation – Once your form is accepted and processed by the depository participant, you will receive a confirmation mail from their end. 

    Read Also: Documents Required to Open a Demat Account

    Last Date to Add Nominee in Demat Account 

    The extended deadline announced by the Securities and Exchange Board of India is 30 June 2024. If you do not nominate a person in your demat account or opt out of the nomination, then your demat account will be frozen for debits by the depositary participant.

    Read Also: Difference Between Demat Account and Trading Account

    Conclusion

    In conclusion, designating a nominee for your demat account is crucial to ensuring a smooth transfer of securities in the event of the account holder’s untimely death. You can designate up to three nominees if you want to transfer the securities to more than one person. These nominees don’t have to be your blood relatives; you can also designate your friends as nominees.


    Frequently Asked Questions (FAQs)

    1. How many nominees can be added to a demat account?

      Investors can designate up to three people in a demat account and specify the asset percentage. For instance, you can divide the assets among the three nominees, A, B, and C, as follows: 25% should go to A, 25% to B, and 50% should go to C.

    2. What if no nominee is updated in the demat account?

      The process of transferring the securities following the account holder’s death may become more difficult and take longer than usual if no nominee is added to the demat account. A legal procedure may be required to determine the account holder’s legal successor.

    3. Is appointing a nominee mandatory for a demat account holder?

      According to the most recent guideline published by the Securities and Exchange Board of India, it is mandatory to add a nominee by 30 June 2024, or else your demat account will be frozen.

    4. Is it necessary that a nominee must be a family member?

      A nominee is not required to be a member of your family or a blood relative. You can choose anyone as a nominee, even a friend.

    5. How can a nominee claim the securities in the Demat account of the account holder?

      A nominee can claim the securities in the account holder’s demat account by providing the depository participants with the account holder’s death certificate and the necessary paperwork.


  • How to Check Demat Account Status or Balance?

    How to Check Demat Account Status or Balance?

    A Demat account holds securities such as shares, bonds, and mutual funds in electronic form, providing a safe and convenient way to manage your investments. Knowing how to check your Demat account status or balanceis essential for monitoring your portfolio and making informed financial decisions. 

    Whether you are an active trader or a long-term investor, regularly reviewing your Demat account helps you stay updated on your holdings, identify market trends, and plan your future investments. In this blog, we will walk you through thesimplesteps to check your Demat account status or balance easily. 

    What is a Demat Account Balance?

    A Demat account balance refers to the total value of securities held in your Demat account, including the shares, bonds, mutual funds, and other financial instruments. Thebalancereflects thequantity and valueof theseholdings in electronic form, providing a consolidated view of your investments. Knowing how to check Demat account balanceis crucial for monitoring your portfolio, whether you are an active trader or a long-term investor.

    Most brokers nowadays provide a number of charts and other infographics to help investors and traders better assess the performance of their investments. Investors can get useful insights, such as the growth in investment value, sector weightage of the portfolio, dividend and other corporate actions, etc., by regularly monitoring their demat account balance.

    How to Check Your Demat Account Balance?

    How to check Demat account balance

    Checking your Demat account balanceis a straightforward process and can be accomplished in two ways: 

    1. Depository Participant’s platforms: You can check your demat account balanceonlinethrough your DP’s official websiteor mobileapplication. Simply log in with your credentials and navigate to the “Holdings” or “Portfolio” section to view your portfolio value. Those wondering how to check their Demat account balance offline can also request a physical demat account statement from their DP, which will have all the details of their holdings.
    1. CDSL and NSDL: Investors can log in using their credentials, download the Consolidated Account Statement (CAS), and view all their investments. It can be accomplished in three easy steps:
    • Enter PAN number and 16-digit demat account number.
    • Enter your Date of Birth for verification.
    • Enter the OTP you receive on your registered mobile number and download your CAS document for a specific time period.

    Checking the status of your account is equally important. Knowing how to check Demat account status ensures that your account is active and functional, which is crucial for making the seamless transactions. A Demat account becomes dormant if the investor doesn’t execute any buy or sell transactions for the last 12 months. You can verify your account status by logging into your DP’s portal. Also, the DP communicates with the client about the dormant demat account and shares the process for reactivating the demat account. To sum up, understanding how to check the Demat account balance or account status is essential for keeping track of your investments and making informed investment decisions. 

    What is a Demat Account Statement?

    A Demat Account statement is a document that lists all the securities, such as shares, mutual funds, etc., held in a Demat account. It provides information about the asset type, quantity, current value, and other details. In short, it is a brief snapshot of your demat account holdings.

    It is essential for investors to track their Demat account holdings to assess the performance of securities held. This helps investors make better portfolio management decisions and plan their future investments better. Moreover, investors can check suspicious transactions by regularly reviewing their Demat account statements.

    Read Also: Demat Account Charges Comparison 2025

    Things to look for while Reading the Demat Account Statement

    Reading a Demat account statement is an essential task for keeping track of your investments. It offers a detailed overview of your holdings and transactions and helps you to assess theperformanceof your portfolio. Herearekey things to look for while reading your Demat account statement:

    • Personal Details: Ensurethat your personal information, such as your name, account number and depository participant (DP) details arecorrect. Any errors should be reported immediately to avoid issues.
    • Holdings Summary: This section displays the securities you currently hold in your account. Verify thedetails and include thequantity and valueof shares, bonds, and mutual funds. Check if the holdings match your recent purchases or sales.
    • Transaction Summary: The transaction history section provides a record of all the transactions carried out in your Demat account during a particular time period. Ensureall transactions areaccurateand no unauthorized activity has occurred.
    • Freeand Pledged Shares: Someshares in your account may be pledged, which means they have been kept as collateral. Investors can only sell the number of shares that appear in the ‘Free Balance’ column, and the pledged shares must be unpledged if the investor wants to sell them.
    • Portfolio Performance: The CAS document shows how your investment portfolio has performed over the past 12 months, which is useful for investors who want to plan their future investments more wisely.

    What is the Need to Check your Demat Account Status?

    It is important to check your Demat Account status for the following reasons:

    • EnsureAccount Activity: Monitoring your account status helps confirm that your Demat account is active and in good standing. Inactive or dormant accounts can cause issues when executing transactions through the linked trading account.
    • Track Investment Performance: By reviewing your account status, you can assess the performance of your securities, track your portfolio growth, and make timely adjustments based on market trends.
    • Identify Unauthorized Transactions: Regularly checking your Demat account status allows you to spot any unauthorized transactions or suspicious activities. This ensures the safety of your investments and prevents fraud.
    • UpdateKYC and Compliance: Staying updated with your account status helps you ensurethat your Know Your Customer (KYC) details areaccurate and up to date. This is important to avoid any regulatory or compliance issues that may arise due to outdated information. 

    Read Also: Documents Required to Open a Demat Account

    Conclusion

    By keeping a close eye on your Demat account status or balance, you can safeguard your investments, respond to market changes, and make informed financial decisions. Investors can check their Demat Account balance by logging in to their DP’s platforms and reviewing holdings or downloading a Consolidated Account Statement (CAS). This proactive approach ensures a well-managed investment portfolio and contributes to long-term financial success. 

    Frequently Asked Questions (FAQs)

    1. Why is it important to check my Demat account status regularly?

      Regularly checking your Demat account status ensures your account is active, and helps track investment performance, identify unauthorized transactions, and keeps your KYC information up to datefor compliancepurposes.

    2. How often should I check my Demat account balance?

      It is recommended that you check your Demat account balance regularly, especially after making the transactions or during the market fluctuations, to stay updated on your holdings and investment performance.

    3. What should I do if I notice unauthorized transactions in my Demat account?

      If you notice any unauthorized transactions, then contact your depository participant (DP) immediately and report the issue. They will guide you on how to freeze the account or take corrective measures to secure your investments.

    4. Can I check my Demat account balance online?

      Most depository participants provide onlineaccess through websites or mobileapps where you can check your Demat account balanceand track your portfolio performance.

    5. What happens if my Demat account becomes dormant?

       If your Demat account becomes dormant, you may face difficulties in executing the trades through the linked trading account. To reactivate the account, you need to contact your DP and fulfill the necessary requirements. 

  • What is a Minor Demat Account? Meaning, Features & Benefits

    What is a Minor Demat Account? Meaning, Features & Benefits

    If you are familiar with equity investments, then you must also be aware of the benefits of starting the investment journey early. If you want to safeguard your child’s financial future but are unsure about the specifics, then this blog is for you. 

    In this blog, we will walk you through the process of opening a Minor Demat account and its features, benefits, and limitations.


    What is a Minor Demat Account?

    Under the Indian Contracts Act of 1872, minors are generally prohibited from engaging in financial contracts in India. However, according to the Indian Companies Act of 2013, any person of any age may own publicly listed shares. With certain limitations, any minor can own a Demat account under this legislation.

    A minor demat account is opened in the name of a minor. However, these accounts require the parents or other legal guardians to take care of the activities, such as transactions and other activities associated with the account, until the minor attains adulthood.

    Features of Minor Demat Account

    The key features of a Demat account in the name of a minor are as follows-

    • Operations – The account is operated by the minor’s parents or legal guardians.
    • Documents – The documents of both minors and their guardians are required to open a minor demat account.
    • Restrictions– A minor account can only be used to sell securities and activities such as intraday trading, derivative trading, etc are prohibited.
    • Taxation – Income generated from investments in a minor demat account is taxed based on the guardian’s tax bracket.
    • Conversion – On attaining the age of 18, the minor’s demat account will be converted into the regular Demat Account.

    Read Also: Lifetime Free Demat Account (AMC Free)

    Eligibility and Documentation for Minor Demat Account

    Eligibility and Documentation for Minor Demat Account

    Eligibility Criteria

    The eligibility criteria to open a minor demat account are as follows-

    1. Age – The person whose account is to be opened must be a minor or below 18 years of age.

    2. Guardian – The guardian is mandatory while opening the demat account in the name of a minor, as the minor cannot operate the account.

    3. KYC – Both the minor and the guardian must fulfill the KYC requirement.

    4. Bank Details – The minor must have a bank account in their name, and only that account must be linked to the minor demat account.

    5. Speculative Trading – SEBI prohibits speculative trading activities in a minor’s demat account.

    Documents Required

    To open a minor’s demat account, the guardian and the minor must provide several documents. The following is the list of the same:

    • PAN Card – This is a mandatory document, and both the minor and guardian must submit it to open a minor demat account.
    • Age Proof – Brokers accept various age verification documents, including birth certificates, passports, school leaving certificates, and mark sheets with the date of birth.
    • Bank Details – Minor’s bank account details must be provided to link it with the Minor Demat account.
    • Passport Size Photo – A passport-size photograph of the minor is also required.
    • Address Proof – An address proof, such as an Aadhaar Card, is also required.

    Read Also: Documents Required to Open a Demat Account

    How to Open a Minor Demat Account?

    The minimum age requirement for a regular demat account is eighteen; however, there is no minimum age requirement for a minor demat account. However, there is a process that must be followed:

    1. Identify the Broker – The first step is to identify the broker registered with NSDL or CDSL with whom you want to open your demat account.

    2. Documents Required for a Minor Demat Account – Gather the necessary documents such as the PAN card of both the minor and guardian, Aadhar cards, the minor’s birth certificate, and bank details. 

    3. Fill out the Basic Details: You can register to open a Minor Demat account online and offline. If you use the offline approach, you can fill out the form and submit it to the broker; if you use the online option, you must visit the broker’s website and fill out the form. 

    3. KYC – Completing the minor and guardian’s KYC is a crucial step while opening the account.

    4. Documents – Attach the scanned copies of necessary documents along with the form.

    5. Verification – Once the broker verifies all the documents, they will open a Minor Demat account and provide you with credentials.

    Rules of Minor Demat Account

    If an individual wants to open a Minor Demat account, then he must follow specific rules and regulations, such as:

    1. Guardian Requirement – A minor’s demat account cannot be opened without a guardian. However, a guardian can be a biological parent or a legal guardian appointed by the court.

    2. Restrictions – Minors cannot buy or sell securities on their own until they turn 18 years old. 

    3. Nomination – A nominee can be registered for a minor demat account by the guardian when the minor demat account is opened.

    4. Account Closure – A guardian can close the minor’s demat account and can either sell or transfer the securities.

    5. Multiple Demat Account – A minor can only have one demat account under the guardianship of a specific guardian. However, if their parents are separated, both parents can open a separate account for the minor.

    Benefits of Minor Demat Account

    There are various benefits of having a demat account in the name of a minor, a few of which are mentioned below-

    • Financial Planning – You can begin investing early for your kid’s future. With a Minor Demat account, parents can save and invest funds for their child’s future goals more effectively.
    • Early Investment – The earlier you start your investment journey, the higher the benefit of compounding will be.
    • Tax Benefits – Investing in the name of a minor will provide tax benefits as the gains from such investment are taxed at the guardian’s tax rate until the child reaches the age of 18 years.
    • Ownership – Having a demat account provides minors with a sense of ownership and responsibility at a younger age.
    • Gifts – Minor can receive shares and other securities from their relatives directly in their Demat accounts.

    What Are the Limitations Applicable to A Minor Demat Account?

    There are various limitations applicable to a minor demat account; a few of such limitations are as follows-

    • No Derivative Trading – Due to the significant risk associated with derivative instruments, SEBI has set restrictions on trading in the derivatives, including futures and options, in the minor’s demat account. 
    • No Intraday and Margin Trades – Engaging in intraday trading and margin trading is prohibited in a Minor Demat account. 
    • No Independent Execution – The minor cannot execute any trade or transfer any security without the guardian’s authorization.
    • No Loans – The holdings in the minor’s demat account are not eligible for loans against the securities.
    • Taxation – The income realized on the investments held in a minor’s demat account, such as dividends, interest, and capital gains, are added to the guardian’s income and are taxed based on the guardian’s tax bracket. Minors cannot be independently taxed until they turn 18.

    Read Also: What is Client ID in Demat Account?

    Conclusion

    To sum up, opening a minor demat account will enable you to safeguard your child’s future and effortlessly accomplish financial objectives like marriage and education of your child. Nonetheless, maintaining a minor demat account is subject to several limitations imposed by the SEBI. It is recommended that you open a Minor Demat account in your child’s name to introduce them to the concepts of investments at a young age. 

    Frequently Asked Questions (FAQs)

    1. Can a minor invest in stocks through a Demat account?

      A minor cannot invest in shares directly; however, the guardian can buy shares on the minor’s behalf and transfer them to the minor’s demat account.

    2. Are minor demat accounts free of Annual Maintenance Charge (AMC)?

      Most brokers don’t charge annual maintenance charges for a minor demat account.

    3. What are the tax implications of income on investments held in a minor’s demat account?

      The tax is calculated based on the guardian’s tax bracket until the minor attains the age of 18.

    4. Can a minor demat account be converted into a regular demat account?

      After attaining the age of 18, a minor’s demat account is converted into a regular demat account. However, KYC documents need to be submitted again

    5. Can we do intraday trading in a minor demat account?

      As per the SEBI, intraday trading and F&O trades are not allowed in the minor’s demat account as such investments carry higher risk.

  • When Bonus Shares Are Credited in Demat Account?

    When Bonus Shares Are Credited in Demat Account?

    When bonus shares are credited to a demat account, it signifies a company’s decision to reward its shareholders by issuing the additional shares at no extra cost. This corporate action is usually announced along with the company’s financial results and reflects its commitment to return value to investors. 

    Understanding the timeline and procedure for bonus share allocation is crucial for investors as it impacts their overall portfolio and investment strategy. This blog looks into the eligibility criteria, benefits and disadvantages of bonus shares. 

    What are Bonus Shares?

    Bonus shares are additional shares given to existing shareholders at no extra cost, typically in proportion to their current holdings. Companies issue bonus shares as a way to distribute retained earnings and rewarding the shareholders. This corporate action is often seen as a positive signal about a company’s financial health and growth prospects. 

    For example, if the company announces a bonus share in the ratio of 4:1, which means that for every share you own in the company, you will get 4 bonus shares. If you own 100 shares of a company, then you will get 400 bonus shares. 

    The process involves several steps, starting with the company’s announcement of the bonus issue and record date. Let’s look at the eligibility criteria for getting bonus shares. 

    Eligibility of Bonus Shares?

    Eligibility for bonus shares is primarily determined by the record date announced by the company. All the investors that hold the shares of the company on the record date are eligible to get bonus shares. 

    For example, suppose a company announces a bonus share issue with the record date as 31 October 2024, i.e., Thursday. As the settlement cycle follows a “T+1” schedule in India, the investors must purchase the shares on or before 30 October 2024 to appear in the list of shareholders on the record date to get the benefit of bonus shares.

    When Bonus Shares are Credited to the Demat account?

    So, the big question is, when will the bonus shares be credited to the demat account? Earlier, it took around 15 days for the bonus shares to get credited to the demat account of the investors, but recently, SEBI issued a circular enabling “T+2” trading of bonus shares, where T is the record date and “T+1” day is the date of allotment. Let us understand this with the help of an example.

    Recently, Reliance announced the decision to issue bonus shares in the ratio of 1:1 on 5 September 2024, which means the investors will get 1 bonus share for each share they own. The record date was announced as 28 October 2024, which makes the date of allotment as 29 October. The shares will be credited to the Demat account of investors on 29 October, and the bonus shares will be available to trade on 30 October 2024.

    Understanding these details is essential for investors as it helps in managing the expectations and planning their investment strategies effectively. Overall, bonus shares can enhance the value of shareholder’s portfolio and make them an important aspect of equity investment. 

    Benefits of Bonus Shares

    Benefits of Bonus Shares

    Bonus shares offer several benefits to both companies and shareholders. These advantages are mentioned below:

    1. One of the primary advantages is the increased number of shares. When a company issues bonus shares, it increases the number of shares an investor owns without requiring additional investment. If the company performs well in the future, then due to an increased number of shares, the investors can get better returns.
    1. Bonus shares improve liquidity in the market. With more shares available, trading becomes easier. Increased liquidity positively impacts the stock price over time.
    1. From the company’s perspective, issuing bonus shares can strengthen investors’ confidence and signal financial health. It demonstrates that the company is performing well financially and can distribute profits, which can attract new investors and boost overall market perception about the company.
    1. Investors don’t have to pay any taxes on the bonus shares immediately.
    1. The share price of the company decreases as it adjusts according to the bonus issue ratio. The lower price makes the share affordable for investors.

    Disadvantages of Bonus Shares 

    The disadvantages of Bonus shares are:

    1. Bonus shares increase the total number of available shares to trade, which can reduce ratios such as Book Value per Share (BVPS), Earnings per Share (EPS), etc.
    2. Investors may begin to expect bonus shares each time the company doesn’t announce a dividend. Failure to meet investor expectations can negatively impact the company’s share price.
    3. Issuance of bonus shares doesn’t provide any immediate monetary gain.

    Read Also: How to Convert Physical Shares into Demat Form?

    Conclusion

    In conclusion, while bonus shares can enhance shareholder value and signal a company’s financial strength, they also carry some drawbacks. Therefore, it’s crucial for investors to weigh both the advantages and disadvantages of bonus shares. A thorough understanding of the timeline of bonus shares can help shareholders make informed decisions and manage their portfolios more effectively. 

    Frequently Asked Questions (FAQs)

    1. What are bonus shares?

      Bonus shares are additional shares given to existing shareholders at no extra cost, in proportion to their current holdings. 

    2.  When will bonus shares be credited to my demat account?

      Bonus shares are credited to the Demat accounts on “T+1” day, where T is the record date.

    3. How do I know if I’m eligible for bonus shares?

      To be eligible, you must hold shares in the company on the record date. Companies announce their bonus shares through public notices, which include details about the record date.

    4. What should I do if I don’t see my bonus shares in my demat account?

       If you haven’t received your bonus shares within the expected timeframe then contact your broker or the company’s investor relations department for updates.

    5. Can I sell my bonus shares immediately after they are credited?

      Yes, once the bonus shares are credited to your demat account, you can sell them like any other share.

    • Open Free Demat Account

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