A Permanent Account Number (PAN) is a crucial document for opening a Demat account in India. However, for individuals without a PAN card, there are alternative ways to open a Demat account, as there are some exemptions. Want to know if you fit the criteria? Read on.
This blog provides a comprehensive look at who can open a Demat account without a PAN card and its benefits. Moreover, we will discuss the process and documents required to open a Demat account.
What is a Demat Account?
A Demat account stands for “Dematerialized account”. It is an electronic storage account used to hold financial securities like stocks, bonds, and exchange-traded funds (ETFs). By digitizing securities, a Demat account eliminates the need for physical certificates, streamlining and securing the trading and investment process.
Opening a Demat account requires essential documents, particularly a PAN (Permanent Account Number) card, which helps investors during tax filing and track transactions. However, for individuals looking to invest or trade who do not possess a PAN card but are eligible for an exemption, it is possible to open a Demat account without a PAN card. The exemptions are discussed later in the blog.
Documents Required for Opening a Demat Account
To open a Demat account, certain essential documents are generally required to verify identity, address, and bank details. These documents ensure compliance with financial regulations. Key documentation includes:
Identity Proof: Commonly accepted identity proofs are the Permanent Account Number (PAN) card, Aadhaar card, passport, or Voter ID. A PAN card is a mandatory document for opening a Demat account as it is used for tax filing purposes and tracking transactions.
Address Proof: Documents like the Aadhaar card, passport, and driving license or utility bills (e.g. and electricity or telephone bill) are commonly accepted for verifying your address.
Bank Details: Providing a canceled cheque or a bank statement with your name, account number, and IFSC code is crucial. This is needed to link your Demat account to your bank.
Income Proof (Optional): Income proof is required for trading in the futures and options segment. A recent salary slip, ITR or six-month bank statement may be needed.
Opening An Online Demat Account
Opening an online Demat account is a quick and convenient process that allows you to manage and store your securities digitally. A Demat account or dematerialized account will securely hold assets like stocks, bonds, and ETFs, also eliminating the need for physical certificates. To open a Demat account online, start by choosing a reliable brokerage or financial institution that offers superior services and user friendly platforms.
The process typically begins by completing an online application form, where you must provide personal details such as your name, address, etc. Uploading essential documents like PAN card, Aadhaar card, bank statement and recent passport-sized photographs is part of the verification process. Some brokers may also require a digital copy of your signature. Upon submission, these documents undergo a Know Your Customer (KYC) verification, which is often completed within a day or couple of days. Once the DP verifies and approves your application, you receive your Demat account details and can begin trading through the broker’s application or website.
Is a PAN Card A Must For A Demat Account?
According to the Securities and Exchange Board of India (SEBI), a PAN card is a mandatory requirement for engaging in securities transactions in India, which makes it essential to open a Demat account. It serves as an identification proof and helps investors and authorities keep track of transactions occurring in a Demat account. Moreover, the PAN card helps regulators track transactions and prevent tax evasion.
However, if you are still wondering “Can I open a Demat account without a PAN card?”, the answer is yes. Investors can open a Demat account without a PAN card, but the applicant must fulfill certain criteria to take advantage of this exemption. Let’s look at the exemptions specified by the SEBI.
How to Open a Demat Account Without a PAN Card?
According to SEBI regulations, some individuals and entities can open Demat accounts without a PAN card. The exemptions are listed below:
Officials appointed by Government: A PAN card is not required for transactions conducted by individuals appointed by the Central Government or State Governments. These individuals can be official liquidators, court receivers, etc.
Investors in Sikkim: Investors residing in Sikkim can open a Demat account without a PAN card. DPs must verify the proof of address thoroughly to confirm that the investor is a resident of Sikkim.
UN entities & Multilateral Agencies: These entities are not required to furnish a PAN card to open a Demat account if they are exempt from paying taxes or filing tax returns.
NRIs or PIOs: Non-resident Indians (NRIs) or Persons of Indian Origin (PIO) are allowed to open a “limited purpose BO account” without a PAN card to sell any securities they currently own in the form of physical form. These accounts are suspended for credit from IPOs, off-market transactions or secondary market transactions. However, the investor continues to receive benefits arising out of corporate actions. Such accounts are valid for a period of 6 months, after which the investor must provide a PAN card to convert the limited-purpose BO account into a normal BO account.
Benefits of Having a PAN Card
A PAN (Permanent Account Number) card is an important financial document in India as it offers a range of benefits. Some of the benefits are listed below:
Simplified Tax Filing: A PAN card serves as a unique identifier for all financial transactions and simplifies the process of filing income tax returns. It helps the government track taxable activities, reduce fraud, and maintain transparency in the financial system.
Avoid Tax Deduction at higher rates: While making payments to NRIs or Indian residents, it is essential for the recipient to furnish their PAN card. If the recipient does not have a PAN card, then the sender must deduct TDS at a higher rate of 20% according to Section 206AA of the Income Tax Act.
Easy Loan Approvals: A PAN card makes it easier to get a loan as it provides a reliable financial history.
Demat Account: A PAN card is mandatory to open a Demat account, which helps investors manage investments easily.
Identity Proof: The PAN card is also widely accepted as proof of identity.
Conclusion
A PAN card is essential for opening a Demat account in India. However, SEBI has specified certain exemptions under which some individuals or entities are not required to provide a PAN card to open a Demat account.
A PAN card tracks an individual’s financial history, helps enhance an individual’s credibility in financial institutions, and simplifies processes like loan applications and credit card approvals. Moreover, the PAN card serves as an ID across various domains. Overall, possessing a PAN card is invaluable for investors to track their transactions and simplify the tax filing process.
Frequently Asked Questions (FAQs)
Can I open a Demat account without a PAN card?
Investors can open a Demat account without a PAN card if they fulfill the criteria listed by the SEBI.
Which documents can be used as identity proof for opening a Demat account?
Identity proof documents include an Aadhaar card, Voter ID, passport, or driver’s license.
Which individuals and entities are not required to provide a PAN card to open a Demat account?
Individuals residing in Sikkim, UN agencies, multilateral agencies, officials appointed by the government, NRIs, and PIOs are not required to provide a PAN card when opening a Demat account.
What is a limited-purpose BO account?
A limited-purpose BO account is a type of Demat account that can be opened without a PAN card and remains active for a period of 6 months. NRIs and PIOs use this account to sell any securities held in the physical form. The account is restricted from receiving credits and requires investors to furnish a PAN card after 6 months to convert it into a regular demat account.
India’s financial market has witnessed a bull run in the past few years, which is why many NRIs are trying to invest in the Indian stock market. An NRI needs a Demat account and a trading account to participate in the Indian stock market. Opening an NRI (Non Resident Indian) trading and Demat account is a straightforward process that helps the NRIs to invest in the Indian stock market. Whether you are looking to trade in equities, mutual funds, or bonds, having the right demat account is essential.
In this blog, we will talk about the steps to open the NRI trading and Demat account and also explain the documents you will need, and clarify the different types of accounts available including the NRE and NRO accounts.
Who is an NRI?
A Non-Resident Indian (NRI) is an Indian citizen who resides outside India for various reasons such as employment, business, or education and does not stay in India for more than 182 days in a financial year. NRIs are allowed to invest in Indian financial markets which is facilitated through NRI Demat and Trading account. The NRI Demat account holds shares and securities in electronic form and makes it easier to manage investments from abroad.
For NRIs, there are different types of accounts, including the NRE Demat account and NRO Demat account, which are used to store securities, and the NRI trading account that allows trading in securities in India. Understanding the features of these accounts is essential for NRIs looking to participate in the Indian stock market and maximize investment opportunities effectively.
What is an NRI Demat Account?
An NRI Demat account is a specialized account that allows the Non-Resident Indians (NRIs) to hold and manage their securities in electronic form. It is essential for NRIs who want to invest in the Indian stock market as it will simplify the process of buying, selling, and transferring shares. There are two main types of Demat accounts for NRIs:
NRE Demat account: NRE or Non-Residential External Demat account allows NRIs to invest in Indian financial markets such as stocks, bonds, etc. Investors use this account to take advantage of the Portfolio Investment NRI scheme (PINS). The NRE demat account is linked with the NRE bank account. The advantage of using an NRE demat account is that both investments and profits earned on them can be repatriated to the NRI’s bank account in their country of residence.
NRO Demat account: NRO or Non-Resident Ordinary Demat account also allows NRIs to invest in Indian securities. It is different from an NRE demat account as it doesn’t require NRIs to invest through the PINS route, and the NRIs can repatriate only up to $1 million of investment to their country of residence.
Can an NRI open a Demat Account in India?
Yes, a Non-Resident Indian (NRI) can open a Demat account in India as it enables them to invest in the Indian stock market. NRIs have the option to choose between an NRE Demat account and an NRO Demat account depending on your investment goals. An NRE Demat account is suitable for those who have a majority of earning sources abroad and want the advantage of repatriating funds freely. On the other hand, if an NRI has income sources in India and wants to claim exemptions on the interest earned, then a NRO demat account is more suitable.
What is the NRI Demat Account Opening Process?
The NRI Demat account opening process involves several key steps to ensure NRIs can effectively invest in the Indian stock market.
Applicants need to select a reputable Depository Participant (DP) that offers NRI demat account services. They can choose between an NRE Demat account or an NRO Demat account based on their income sources.
Get the NRI account opening form from DP’s website or nearest branch.
Mention all the relevant details and attach all the required documents, such as proof of identity and proof of address. Documents required include a copy of passport, proof of overseas address, copy of PAN card, etc. Communicate with the DP to get a complete list of the documents required.
Sign the agreement with the DP. The agreement lists the responsibilities of both the investor and DP.
DP verifies the information, and upon successful verification, an NRI Demat account is opened, and the DP sends the credentials to your registered email ID.
Documents Required for NRI Demat Accounts
Specific documents are required to comply with regulatory norms and ensure a smooth account opening process. The documents required for a NRI demat account are:
Copy of passport as proof of identity
Copy of valid VISA
Copy of PAN card
OCI (Overseas Citizenship of India)
Overseas Address Proof
Passport size photograph
Bank Account Details
These documents ensure that the NRI trading account in India is set up correctly and facilitating efficient trading and investment management while adhering to legal requirements. Proper documentation helps streamline the process of opening a Demat account for NRIs.
NRI Demat Accounts: The Benefits
NRI Demat accounts offer several benefits that empower Non Resident Indians (NRIs) to invest in the Indian stock market.
NRI demat account allows NRIs to hold securities in electronic form and simplifies the management of investments. With an NRI Demat account, transactions are quicker and more efficient, and the need for physical paperwork is eliminated.
NRE demat account offers the investors the option to repatriate funds.
NRO Demat account allows NRIs to manage the income generated in India while complying with tax regulations.
Conclusion
In conclusion, Demat accounts for NRI serve as essential tools for Non-Resident Indians looking to invest in the Indian stock market. With benefits like electronic storage of securities, seamless transactions, and compliance with tax regulations, these accounts simplify the investment process. However, investors must choose between the NRE and NRO demat accounts based on their investment goals and sources of income.
Frequently Asked Questions (FAQs)
What documents are required to open an NRI trading and Demat account?
To open an NRI trading and Demat account, you need to provide a copy of your valid passport, VISA, PAN card, OCI, proof of overseas address and a recent passport sized photograph.
Can I open both NRE Demat and NRO Demat accounts?
Yes, you can open both NRE and NRO accounts simultaneously.
Is it mandatory to have an NRI trading account to open a Demat account?
Yes, it is mandatory to have an NRI trading account linked to your Demat account. This trading account enables you to execute buy and sell transactions in the Indian stock market.
How long does it take to open an NRI trading and Demat account?
An NRI trading and demat account can be opened within a couple of days.
Can I manage my NRI trading and Demat account online?
Yes, most financial institutions, and brokerages offer online platforms for managing your NRI trading and demat accounts. You can access real-time market data, execute trades, and monitor your portfolio conveniently from anywhere in the world.
A Demat account is an absolute must-have for holding shares and securities traded in the financial markets. Research shows that in 2024, there were 46 million more demat accounts.
In addition to this, people are now opting for a joint demat account. This allows multiple individuals to jointly hold and manage investments stored in a single demat account.
You can open a Demat account online. This reduces the ownership structure’s complexity and opens up more possibilities for families, business partners, or spouses wanting to pool together their investments.
What is a Joint Demat Account?
A joint demat account can be defined as an account that allows two or more individuals to jointly hold and manage securities. A joint bank account functions similarly by giving the account ownership of shares to several holders.
A joint Demat account can have up to three account holders. This includes one primary and two joint holders. The primary account holder is responsible for the account. Although the primary account holder is responsible for the account, all demat account joint holders have equal rights in managing the investments.
Prominent Features and Benefits of a Joint Demat Account
Some of the most common features and benefits of a joint demat account include:
1. Pooling Resources
Joint account holders can pool their funds and make shared investments with a joint demat account. This helps increase the overall investment amount, allowing joint holders to invest more effectively.
2. Reduced Maintenance Fees
A joint demat account allows everyone to split the maintenance costs. This reduces overall fees. This makes it an economical choice for those looking to manage investments together. Sharing these expenditures is much cheaper than keeping separate accounts for each member.
3. Smooth Estate Transfer
If one of the demat account joint holders dies, the surviving holder(s) will immediately take over the account. This simplifies and expedites the process of transferring assets. It eliminates the need for complex legal formalities.
Who Can Open a Joint Demat Account?
Joint demat accounts can be opened for anyone fulfilling depository participant (DP) criteria. Joint demat accounts can be opened by the following individuals:
Residents of India above 18 years of age.
NRIs that comply with applicable regulations.
The holders can be unrelated to each other: business partners, friends, family members, etc., can co-own a joint demat account. However, all holders must conform to KYC norms.
Documents Required for Opening a Joint Demat Account
When you open joint demat account online, it requires the following documents:
PAN Card: A copy of the PAN card for each account holder.
Photographs: Recent passport-size photos of all account holders.
Proof of Identity: Documents like an Aadhaar card, Voter ID, passport, or driver’s license.
Proof of Address: Documents such as an Aadhaar card, utility bill, or passport to verify the address.
Bank Account Proof: A cancelled cheque or a recent bank statement of the primary account holder.
Income Proof: A salary slip, bank statement, or income tax return acknowledgement.
Select a Depository Participant (DP) that is registered with the NSDL or CDSL.
2. Fill Out the Application Form
You can get the joint demat account opening form from the DP’s website. All account holders are required to disclose their information. Verify the accuracy of all the information.
3. Attach Required Documents
Upload scanned copies of the identity proofs, address proofs, bank proofs, and photographs of all the holders. These should all be self-attested by the holders concerned.
4. Complete KYC Formalities
All holders should submit KYC forms and complete in-person verification if needed.
5. Submit the Application
Submit the application and the documents in their complete form on the DP’s website.
6. Verification and Approval
After verifying the details submitted, the DP shares the login details and authorizes it.
Points to Consider Before Opening a Joint Demat Account
Here are the key joint demat account rules to consider before opening an account:
1. Approval of All Account Holders
Transactions in a joint demat account require approval from each account holder. The transaction is invalid if full consent is not obtained. This guarantees that everyone is aware of the activities occurring within the account.
2. No Changes to Account Holder Details
Once the joint demat account is opened, you cannot change details such as names or birth dates. If there is an error, you will have to create a new account. To avoid future account issues, make sure to double-check all information before applying.
3. Tax Responsibility
In a joint demat account, the primary account holder is liable for paying capital gains taxes. Despite the fact that there are several account holders, the principal holder is responsible for paying taxes.
4. One Trading Account Only
Only one trading account is connected to the joint demat account. This is usually held by the principal account holder. This main holder is the recipient of all messages pertaining to the account. This implies that they are in charge of overseeing the account. They also get information about all the activities occurring within the account.
5. Account Changes after Opening
You cannot convert an individual Demat account into a joint one. To open a joint account, you must apply from the start.
By now, you must have understood how to open joint demat account. Understanding the principles and techniques can help you maximize your money. It’s an excellent choice for anyone wishing to invest jointly.
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Can I add or remove joint holders after opening a joint Demat account?
No, once a joint Demat account is opened, you cannot add or remove joint holders. If any changes are required, you will have to close the existing account and open a new one.
Is it possible to convert an individual Demat account into a joint Demat account?
No, an individual Demat account cannot be converted into a joint Demat account. You must apply separately for a joint account from the beginning.
Who is responsible for taxation in a joint Demat account?
The primary account holder is responsible for paying capital gains tax, even though the account has multiple holders. Tax liabilities are calculated based on the transactions made in the account.
Can all joint account holders access the trading account linked to the joint Demat account?
No, only the primary account holder has access to the trading account linked to the joint Demat account. The principal holder also receives all transaction-related notifications.
What happens to a joint Demat account if one of the account holders passes away?
In case of the demise of one of the joint holders, the surviving holder(s) continue to manage the account. The account is seamlessly transferred without complex legal formalities.
A Demat account is necessary to participate in the stock market in India. Although many brokers in the market offer Demat account services, you should select one based on your needs.
In this blog, we will give you an overview of the best Demat account in India for 2025, along with the top three recommendations for traders and investors.
What is a Demat Account?
An investor can keep financial assets, including stocks, mutual funds, ETFs, bonds, and more, in an electronic demat account. Before 1996, securities were exchanged in physical certificates, which had several dangers, including damage from forgeries and theft. Demat accounts were created to remove these risks. If you wish to trade on the Indian Stock Market, you must have a Demat Account.
What to Look for in a Demat Account App?
The key considerations for selecting the best Demat Account:-
Brokerage – Brokers typically charge a commission as a fee for using their platform to execute trades. You should choose the broker for opening a Demat account that offers you the lowest brokerage.
Account Maintenance Fees – Customers are charged fees for maintaining their Demat accounts by the broker. Since these yearly maintenance charges differ from broker to broker, it is essential to consider brokers who offer lower annual maintenance fees.
Account Opening Fees – A one-time fee is charged by some brokers while opening a demat account with them. However, the majority of brokers are offering zero account opening fees.
Margin Interest – Brokers lend money to their clients and charge interest on it at a certain rate; therefore, if you wish to opt for a margin trading facility, then you must consider the broker who charges a minimum interest rate on this facility.
Research Tools – There are various types of research tools offered by brokers; therefore, one must choose a broker who offers the most advanced trading tools.
Customer Support – One of the most important things to consider when opening a Dement account is customer service. Customer service is crucial because you want any issue you encounter when managing a Demat account to be fixed as soon as possible.
Overview of the Top 10+ Demat Accounts Apps for Traders and Investors
An overview of 10 + Best Demat Accounts for traders and investors is given below:-
1. Pocketful – Free Demat Account App
Pocketful is a new-age discount broking firm offering a wide range of investment options such as equity, commodity, derivatives, etc. Pocketful was launched in 2024 and is backed by Pace Financial Group. Pocketful is developed by professionals with more than 27 years of experience, which ensures enhanced user experience. Pocketful is different from other discount brokers as it offers one of the best trading platforms and does not charge any fees for equity delivery-based trades, account opening, or yearly maintenance fees. Therefore, it is the best option for both traders and investors.
Key Features
Pocketful provides a free trading platform since there are no brokerage on equity delivery trades, zero account opening fees and zero annual maintenance fees for the first year. These benefits make it a strong contender for users searching for the best demat account in India.
An online account can be opened with Pocketful within five minutes.
You can create your trading strategies using free Pocketful APIs.
Best For: Because of its user-friendly design, zero brokerage on equity delivery transactions, and no annual maintenance fees for the first year, Pocketful is the best broker for traders and investors. Additionally, it offers advanced trading tools to analyze the market. Therefore, one can consider opening a Demat account with Pocketful.
2. Zerodha
Zerodha is one of the major players in the Indian stock broking industry. It was established in 2010 by the Kamath Brothers and offers a distinctive trading platform focusing on cutting-edge technology. It introduced a new pricing structure in the broking industry, which was known as flat brokerage for trading. Many traders searching for the best demat account in India consider Zerodha due to its transparent pricing and tech-driven ecosystem.
Key Features
Zerodha is renowned for its user-friendly trading platform.
It has a dedicated customer service team that assists its clients in resolving their queries.
Varsity is a free education platform offered by Zerodha to enhance the knowledge of their client.
Best For: Investors who want to trade in the stock market with the broker that offers the lowest brokerage can opt for this platform.
3. Angel One
Angel One is one of India’s top full-service brokers. It was established in 1996. It offers trading and investing in a variety of assets such as equity, commodity, derivatives, etc., and investment advisory services. Their cutting-edge software platform prioritizes customer requirements, making it a strong choice for individuals evaluating the best demat account in India.
Key Features
The main advantage of opening a demat account with Angel One is their customer-focused approach.
Advanced trading tools are available in Angel One’s application.
The company has a strong offline presence across the nation.
Best For: Angel One is suitable for traders who prefer offline broking services.
4. ICICI Direct Securities
One of the top stockbrokers in India is ICICI Direct Securities. One of the biggest banks in India’s private sector, ICICI Bank, owns ICICI Direct as a subsidiary. It offers a three-in-one account, which combines savings, trading and a Demat account through which an investor can effortlessly move funds from their savings account to their trading account. They offer a large variety of investment products that are tailored to meet the customers’ requirements.
Key Features
Through its local offices, the company maintains a strong national presence, assisting its investors with any questions they may have.
ICICI Direct also provides its clients with consultancy and research services.
Additionally, it provides its investors with individual or customized wealth management solutions.
Best For: ICICI Direct Securities is a good option for investors who need assistance from local branch offices.
5. Kotak Securities Limited
Kotak Securities is a division of Kotak Mahindra Bank, one of the largest private sector banks in India. It makes it simple for their customers to link their bank account to their trading and demat accounts. Kotak Securities provides its investors with a variety of investment products, such as equities, commodities, and derivatives. Kotak Securities’ desktop-focused Neo Web and the mobile application Kotak Neo both provide real-time market data to traders and investors.
Key Features
Apart from trading in equity and commodities, it also offers a wide range of investment options, such as mutual funds.
Kotak Securities educates investors through various educational initiatives.
Because Kotak Bank supports the company, it enjoys a great reputation as a brand.
Best For: Kotak Securities is a good choice for investors who want to enhance their stock market knowledge through their online tutorials.
6. Upstox
Upstox offers a modern trading platform and technical tools that help investors predict the trend of a commodity or a stock price. Additionally, they provide an option chain with a strategy mode that allows you to formulate and carry out your trading plans.
Key Features
The mobile application offered by Upstox makes it simple for a beginner to start trading.
You can create several watchlists on the platform and add equities, commodities, etc., for intraday trading.
There are no annual maintenance charges payable by the investor while keeping an Upstox account.
Best For: Upstox is suitable for traders who wish to utilize technical analysis as a tool for intraday and swing trading.
7. 5Paisa
One of the leading discount brokers in India, 5Paisa offers a variety of services, including commodity and equities trading. It was founded in 2016 with the main goal of providing broking services at low prices. 5Paisa is an AMFI-recognized distributor of mutual funds.
Key Features
They offer user-friendly web-based and mobile-based trading platforms to investors that offer them a seamless trading experience.
5Paisa offers investment in mutual funds through its platform.
Their FnO360 platform offers advanced tools so that investors can make informed decisions.
Best For: 5Paisa is an option for those who want to learn about the stock market through interactive workshops.
8. Sharekhan
Established in 2000, Sharekhan was among the first broking firms in India to provide online trading services to regular clients. By opening franchises around the nation, it expands its business at an exponential rate. It was purchased by the French investment banking company BNP Paribas later in 2016 and was then sold to Mirae Asset Financial Group in 2024.
Key Features
They provide a smooth mobile application with advanced trading tools.
Sharekhan offers an advanced training program for its investors through its online courses, popularly known as the Sharekhan Classroom.
It has a dedicated customer support team that addresses its customers’ queries.
Best For: For people who want to learn about technical and fundamental analysis, Sharekhan is the ideal choice.
9. Motilal Oswal Financial Services Limited
Motilal was founded in 1987 and is regarded as a major participant in the Indian broking industry. It offers advisory services, portfolio management services and investment in various asset classes. With more than 30 years of experience and multiple awards in recent years, they offer research reports in addition to advanced trading tools through their website and their mobile application named RISE.
Key Features
Motilal Oswal Financial Services Limited provides its clients with customized financial solutions.
Their mobile application is one of the best in the industry due to its user-friendly interface.
Loans against securities are also offered by the company.
Best For: Ideal for investors who wish to have access to a variety of specialized financial products in one location, including portfolio management services.
10. SBI Securities
It was incorporated in the year 2006, and initially, it was known as SBICap Securities Limited. It is a wholly-owned subsidiary of the State Bank of India, which is India’s largest public-sector bank. SBI Securities is known for its extensive branch network and trust among investors due to government support for SBI. Along with equity and commodity trading services, it also offers research and advisory services.
Key Features
They have personalized relationship managers for their high-net-worth individual clients.
SBI Securities can increase the purchasing power of existing customers by offering them margin trading facilities for intraday traders.
Best For: This platform is suitable for both new and experienced investors as it offers comprehensive services. However, the fees charged by them are comparatively higher than those of others.
11. Axis Direct
Axis Direct was founded in 2011 and is a division of Axis Securities Limited, which is a subsidiary of Axis Bank. The company used innovative technology and created the Axis Direct platform, which is now among the top trading platforms in the Indian broking industry. The customers of Axis Bank can easily link their bank account to their demat account. The company’s headquarters is situated in Mumbai.
Key Features
It offers advanced trading and investing platforms to its customers.
The Axis Direct provides regular, in-depth fundamental research reports on different stocks, sectors, and commodities.
Margin funding is also an additional feature provided by Axis Direct to their investors.
Best For: Investors looking to use the margin trading facilities provided by the broker can consider Axis Direct as an option.
12. IIFL
In 1985, IIFL was established as a division of the India Infoline Group. Originally founded as an advisory firm, its primary focus was on research and related activities. In 2005, it changed its name to India Infoline and went public on the Indian Stock Exchange. The company offers an advanced trading platform and ensures that its investors make wise investment decisions through its research reports.
Key Features
IIFL offers research and advisory services to its customers.
It also offers a user-friendly trading platform.
Various free educational sessions are also provided by IIFL to their customers to enhance their knowledge.
Best For: Investors may choose to open a demat account with IIFL if they would like research and advisory services in addition to quick trade execution.
13. Edelweiss Broking
The Edelweiss Group chose to expand their business in 2008, and decided to enter into the broking service industry, and established Edelweiss Broking Limited. From 2010 to 2015, the company focused on research and advisory services. Along with this, they offered their clients a cutting-edge investing platform. The company began to diversify its product portfolio and included mutual funds and portfolio management services in 2015.
Key Features
It offers algorithmic trading services to its customers.
They also suggest actively managed funds to their customers based on market conditions.
Daily market updates are also provided by Edelweiss to their investors so that they stay updated about the market conditions.
Best For: Edelweiss broking is suitable for those investors who are looking for a comprehensive array of services, such as advisory, trading etc., in one place.
14. Groww
It was incorporated in 2016 by the four Flipkart employees. Over time, this platform has grown in popularity among beginners in trading because of its easy-to-use interface.
Key Features
It charges minimal fees from its customers.
They provide investment in stocks, ETFs, mutual funds, etc., along with credit and bill payment services.
Best For: It is suitable for investors who wish to have access to all their investments in one place or at a single application.
15. Paytm Money
When Paytm Money was launched in 2017, it started operations as a direct mutual fund investment platform. One97 Communications Limited, the parent firm of Paytm, gained popularity right away among individual investors looking to cut costs when investing in mutual funds. In 2019, the company decided to provide low-cost stock trading services. The company’s headquarters is situated in Bengaluru.
Key Features
Paytm offers a user-friendly application to provide their investors with a hassle-free trading experience.
It also offers access to direct mutual funds through which a customer can save costs.
It offers various calculators, such as SIP, lumpsum, etc., on its platform.
Best For: It is suitable for investors who are looking for platforms that offer trading facilities at a lower cost and fulfill their investment needs.
The 3 recommended brokers for the traders are as follows:-
Zerodha: Due to their cost-effectiveness, investors adore Zerodha, which is regarded as the biggest broker in India with millions of customers, affordable pricing, and flat brokerage costs. Sensibull for sophisticated options trading, Streak for algo trading, KITE for web and mobile-based trading, and a tiny case for theme-based investment are some of its intelligent trading tools. Their trading tools make it easy to place orders, and Varsity, their educational program, is a special selling point.
Pocketful: Another up-and-coming stock broking company that provides a variety of investing possibilities and has no equity delivery fees. The application is simple to use and navigate. The platform, which aims to make investing easier, is a relatively new fintech platform in India. Its goal is to offer a smooth trading experience. The Goel brothers, Rishabh and Sarvam, founded it. The Goel Brothers are differentiating Pocketful from other bargain brokers by using their family’s experience from the Pace Stock Broking company, which has been involved in financial services for more than 30 years.
Upstox: In addition to offering slick trading interfaces, Upstox charges trading costs that are comparable to Zerodha’s flat rates. It has sophisticated charting capabilities, and Upstox has a special feature called Tick-by-Tick Engine that gives retail traders information regarding buy and sell orders. Previously, this capability was restricted to institutional and wealthy individual clients.
Top 3 Demat Account Recommendations for Investors
The 3 recommended brokers for the investors are as follows:-
Pocketful: The ideal alternative for those who want to make long-term investments is Pocketful. This finance platform is modern. There are no annual maintenance fees, account opening fees, or delivery fees with Pocketful. Their platform is built on state-of-the-art technology created by experts with over 27 years of experience. Through their site, one can invest in a wide range of assets, improving the user experience.
Kotak Securities: One of the biggest private sector banks in India, Kotak Mahindra Bank, owns Kotak Securities as a subsidiary. Additionally, it provides its clients with bank accounts and integrated demat trading for simple money transfers. Kotak Securities offers a vast array of investing options, such as mutual funds, stocks, derivatives, fixed-income products, and more. It provides cutting-edge trading platforms like Kotak Stock Trader, a web-based trading platform, and KEAT Pro X, a desktop-based trading platform that gives active traders access to real-time market data. It also offers sophisticated charting tools.
Motilal Oswal Financial Services Limited: Founded in 1987, it is one of the top broking organizations in India, providing a wide range of investment alternatives, portfolio management services, and consulting services. Their advanced trading systems include. It provides the desktop trading terminal in addition to the investor and trader apps. Motilal Oswal’s research and advising services are regarded as some of the best in the business. It provides customized consulting services for its HNI clientele and has thirty years of research knowledge. One of the best PMS services available in the market is their portfolio management platform.
Cost Efficient – A good demat account must be cost-efficient, which means the brokerage and other kinds of fees levied by the broker are less.
Ease of Tracking and Managing Investment – As securities are held in electronic form, the tracking and managing of investments is efficient and hassle-free.
Enhanced Trading Experience with Advanced Platforms – The trading platform offered by the broker must be equipped with advanced trading tools to enhance the trading experience of a trader.
Ease of Account Opening – The process of opening an account with a broker should be easy and convenient. Nowadays, a demat account can be opened in just 24 hours.
Free Research Tools—Many brokers provide demat accounts for free. However, their trading and research tools are paid; for this reason, one should consider opening a demat account with a broker that provides free research resources.
Reliability – The broker with whom you open your demat account must be credible and reliable.
Transparent Pricing – The pricing offered by the broker must be transparent. There must be no hidden charges.
How to Open Demat Account: A Step-by-Step Guide
Opening a Demat account with Pocketful is quick, fully digital, and hassle-free. Follow the simple steps below to get started with your investment journey.
Step 1: Download and Register: Download the Pocketful app from the Google Play Store or Apple App Store and click on ‘Register’ to begin.
Step 2: Enter Personal Details: Fill in your name, mobile number, date of birth, PAN number, and address to start your application.
Step 3: Upload KYC Documents: Upload your Aadhaar card, PAN card, and a recent bank statement to complete the KYC process.
Step 4: Complete eSign & Submit: Verify your information and eSign the application using your Aadhaar-linked mobile number.
Step 5: Verification & Account Activation: Pocketful verifies your details, and once approved, your Demat account is activated. You’ll receive your Client ID and login credentials to start investing.
Importance of a Demat Account in Trading and Investing
There are various of having demat accounts, a few of which are mentioned below-
Holding Securities – A Demat Account allows you to hold securities electronically.
Transactions – If you want to sell or buy any securities, a demat account makes the process simpler.
Nomination – An investor can nominate their close ones who will inherit the securities held in their demat account in case of the holder’s unfortunate death.
No Minimum Balance – You are not required to have any minimum balance in your demat account.
Corporate Actions – The demat account manages all the corporate actions like right issues, bonus shares, etc.
How to choose the right Demat Account for Long-Term Investment
There are various factors one should consider before choosing the right demat account, a few of which are mentioned below:-
Investment Objective: Selecting a platform that provides sophisticated trading tools and cheap transaction fees is essential if you are a short-term trader. However, you should search for a broker that offers cheap annual maintenance fees if you are a long-term investor.
User-friendly interface: Before selecting a broker, you should confirm that the platform they provide is user-friendly and straightforward to use so that you can trade with ease.
Research Services: If you are new to investing, then you must opt for a broker which offers you valuable research reports and research calls that can make your investments.
Customer support: The customer support offered by the broker must be taken into consideration as Whenever you face any issues the queries must be resolved on an immediate basis.
Hidden charges: Various brokers in the industry charge some kind of hidden fees from their customers; therefore, before choosing a broker, one must conduct proper research about the hidden charges.
Trading Platform: Before choosing a broker, one must consider a trading platform which offers all the key features required by a trader or investor.
In conclusion, you should evaluate the services, fees, customer service, etc., that your broker offers if you intend to open a demat account. The investor’s investment goal also influences the broker’s choice. A Demat account, which provides the lowest brokerage and cutting-edge trading platforms, is something you should think about if you are a short-term investor. Choose a broker that offers the lowest or no annual maintenance fees, though, if you are a long-term investor.
With its cutting-edge trading tools, lowest brokerage, lowest annual maintenance fees, and other features, Pocketful provides you with a demat and trading account. By clicking the link, you can open a demat account with us.
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Depending on their investing goal, beginners should select a Demat account. When searching for short-term trading opportunities, a Demat account with the lowest brokerage is a requirement, but when seeking long-term investment, a Demat account with the lowest yearly maintenance expenses is a must. We at Pocketful provide you with the most affordable brokerage and yearly maintenance fees.
How to open a demat account online?
You can open a demat account online by completing KYC, uploading documents, and eSigning using your Aadhaar-linked mobile number. Apps like Pocketful, Zerodha, and Angel One allow fully digital onboarding.
Is there a difference between a demat account and a trading account?
Indeed, the trading account allows you to buy or sell assets, whereas the Demat account just keeps them in electronic form.
Can I open a trading and demat account with the same broker?
Yes, you can open both trading and demat accounts with any broker that offers integrated account services.
Who can open a trading and demat account?
Any resident or non-resident person, corporate entity, or minor may open a Demat account; however, the legal guardian must be the only person able to manage the minor’s account.
What is the minimum amount required to open a demat account?
To start a demat account, you simply need to pay the opening fees, which are typically waived by brokers. There is no minimum amount needed.
Which demat account has the lowest brokerage?
Pocketful, Zerodha, 5Paisa, and Upstox offer low or flat brokerage, making them ideal for those looking for a low brokerage demat account.
What are SBI demat account charges?
SBI demat account charges include account opening fees (₹0), AMC (₹750 after year 1), and brokerage charges based on the type of trade.
Is Groww app safe for investing?
Yes, the Groww app is SEBI-registered and considered safe for investing and trading.
Which bank offers the best demat account in India?
Banks like ICICI Direct, HDFC Securities, SBI Securities, and Kotak Securities are popular choices among bank-linked demat accounts.
Is Zerodha better than Groww?
Zerodha offers advanced charts and tools, while Groww is known for simplicity. For advanced traders, Zerodha may be better; for beginners, Groww may be easier.
What is the Groww app and how does it work?
The Groww app is a beginner-friendly investment platform that allows users to invest in stocks, mutual funds, ETFs, and more through a simple and intuitive interface.
Is Zerodha good for opening a demat account?
Yes, Zerodha is one of India’s most popular brokers, known for its low brokerage fees, advanced charting platform (Kite), and reliable customer support.
Is Angel One a good choice for trading?
Yes, Angel One offers a powerful app, advanced charting tools, and competitive brokerage, making it suitable for both beginners and experienced traders.
What services does SBI Securities provide?
SBI Securities offers equity trading, derivatives, mutual funds and research.
How good is the HDFC demat account?
The HDFC demat account offers strong banking integration, a secure platform, and efficient customer service through HDFC Securities.
Is ICICI demat account good for investors?
Yes, the ICICI demat account is popular for its 3-in-1 account setup, strong research tools, and excellent customer support.
In 2025, selecting the right Demat account is crucial for retail and institutional investors as India’s financial markets expand. Demat accounts play an important role in the electronic holding and trading of securities. However, understanding the fees related to these accounts is essential for maximizing your returns.
This blog explains the types of demat account charges and compares demat account charges.
Why Should You Compare Demat Account Charges?
Demat accounts have various visible and hidden fees that can impact investment costs. Investors can boost their returns and minimize costs by comparing account opening fees, maintenance charges, transaction fees, and other related expenses.
Types of Demat Account Charges
Before we start with the comparison, it is essential to know the main types of demat account charges as listed below:
Account opening charges: It is a one-time charge that is incurred for opening a demat account.
Annual maintenance charge (AMC): It is a yearly fee for keeping your demat account active.
Brokerage charges: These are the costs incurred for executing trades on the platform.
Dematerialization and Rematerialization charges: Fees for converting securities from physical to electronic forms and vice versa.
Off-market transaction charges: Fee applicable for transferring securities between demat accounts.
DP Charges: These charges refer to the fees imposed by depository participants on behalf of depositories such as CDSL or NSDL for holding your securities
Pledging Charges: These are the charges that are applied by the broker when securities are used as loan collateral or fulfill margin requirements.
Comparison of Demat Account Charges Across Popular Brokers
Broker
Account opening charges
Account maintenance charge
Dematerialization and Rematerialization charges
Brokerage Charges
Pocketful
0
₹0 (Zero account opening charges)
1. Demat: Rs. 150/- per certificate 2. Remat: Rs. 150/- per certificate + CDSL Charges
Subscription-based brokerage
• Equity Delivery: ₹0 within active plan • Equity Intraday: Included in subscription • Futures: Included in subscription • Options: Included in subscription
(Statutory charges like STT, GST, exchange fees apply separately)
1. For BSDA: Rs. 0 if holding > INR 4 Lakh 2. Non-BSDA: INR 300/year+18% GST charged quarterly
1. Demat (Per certificate) : Rs. 150/- per certificate. 2. Remat (Per certificate): Rs. 150/- per certificate+ CDSL Charges
Courier charges of Rs. 100 are applicable for each demat/remat request.
1. Equity Delivery: Rs.0 2. Equity Intraday: 0.03% or INR20/ executed order, whichever is lower 3. Futures: 0.03% or INR 20, whichever is lower 4. Options: Rs. 20 per executed order
5 Paisa
Free
1. For BSDA a) 0 per month if your holding value is less than INR50,000 b) INR 8 per month if your holding value is INR 50,000 to INR 2,00,000 c) Rs. 25 per month if your holding value is above INR 2,00,000 2. For Non-BSDA: INR 25 per month
1. Demat – INR 15 per certificate 2. Remat – INR 15 per Certificate ORper 100 Units/shares(whichever is higher)
1. Equity Cash/ Equity F&O: INR 20 per order
Angel One
0
1. For Non-BSDA: INR 60 + GST per quarter
2. For BSDA: a) NIL if Holding Value less than INR 4,00,000.00 b) Rs. 100 + GST per year if holding value greater than Rs. 4 lakh and less than Rs. 10 lakh c) Holding value above Rs. 10 lakh is a non-BSDA account.
1. Demat: INR 50 per certificate 2. Remat: INR 50 per certificate + Actual CDSL Charges
1. Equity Delivery: Rs. 0 up to Rs. 500 for first 30 days. Then lower of INR 20 or 0.1% perexecuted order, a minimum INR 2 2. Intraday: Rs. 0 brokerage up to Rs. 500 for first 30 days, then lower of INR 20 or 0.03%. 3. F&O: Rs. 0 brokerage up to INR 500 for the first 30 daysthen, INR 20 per executed order
Upstox
0
Only for those accounts opened before August 2021 1. AMC of INR 150 + GST = ₹177/- 2.Quarterly maintenance charges of ₹75 + GST = ₹88.50/- (as applicable as per offer/plan)
1. Demat: INR 200 per share certificate, INR 50 for courier services +18% GST. 2. INR 25 for every certificate
1 . Equity Delivery: INR 20 per executed order 2. Equity Intraday: INR 20 or 0.05%, whichever is lower 3. Futures: INR 20 or 0.05%, whichever is lower 4. Options: INR 20 per executed order.
Groww
0
0
Demat/Remat – INR 150 per certificate + courier charges.
1. Equity: INR 20 or 0.05% of order value, whichever is lower. 2. F&O: INR 20 per executed order
Non-BSDA or Regular Demat Account: This account suits active traders and investors with higher investment volumes and usually involves higher maintenance charges.
Factors to Consider When Choosing a Demat Account
Various factors to consider before choosing a Demat account are:
Demat Account Charges: Certain brokers impose fees for opening a demat account, while others provide the service at no cost. When opening a demat account, an individual should factor in the amount of the account opening fee and AMCs.
Brokerage: Compare brokerage rates for intraday trading, delivery trades, and future & options trading. Choose discount brokers for frequent trading as they generally offer lower fees than full-service brokers.
Trading Platforms and Tools: Make sure the broker offers a dependable and user-friendly platform for trading on mobile applications. Look for advanced features such as real-time charts, technical analysis tools, and quick execution speed.
Regulatory compliance and Ratings: Check if the broker is registered with regulatory authorities such as SEBI. You can go through the customer reviews and ratings on the internet to assess the reliability of their service.
Customer support: Seek brokers that provide fast and easy customer service via phone, email and live chat. Also, check their service hours and availability during trading hours.
Nomination services: Select a broker that lets you choose a nominee to protect your investment. Use brokers with strong security measures like two-factor authentication to safeguard your account.
Geographic reach and branch network: If you value in-person support, consider choosing brokers that offer an extensive branch network. Assess their capability to offer services in various cities or regions.
Account closure and Transfer process: Check the process and any fees for closing your account or transferring holdings to a different demat account.
Hidden Charges to Watch out for
You must be aware of the hidden charges associated with a Demat account:
Call & Trade Charges: These are fees charged for placing orders via phone with your broker instead of using online trading platforms. If you find yourself unable to execute trade online because of technical difficulties, you can choose the call & trade option.
Stamp Charges: This is a kind of tax imposed by the government on the value of security traded in your account. It is charged during the purchase of stocks and other assets.
Account with Debit Balance: It is a penalty or interest imposed on a demat account because of insufficient funds for unpaid balances.
Margin Trading Facility (MTF): It is a facility that allows investors to borrow funds from the broker to trade larger positions than their available cash balance. Additional interest charges are imposed when an individual avails margin facility to buy shares.
DIS Slip Request Charges: DIS stands for delivery instruction slips. These are the charges levied for obtaining DIS booklets to transfer shares offline between demat accounts. It is applicable for manual share transfers instead of online ones and is often needed by investors with accounts at different DP.
DDPI Charges: DDPI stands for Demat Debit and Pledge Instruction. These charges are levied when issuing DDPI, which allows brokers to debit or pledge securities from an individual’s demat account.
How Can I Reduce My Demat Charges?
Lowering your demat account fees can improve your investment returns. Some of the points by which you can reduce your demat charges are listed below:
Choose discount brokers because they usually have lower account opening fees, AMC, and transaction costs than full-service brokers.
Avoid having multiple demat accounts unless necessary since each one has its own maintenance fees. Transfer holdings from unused accounts to your active account and close dormant accounts to save on AMC.
Reduce the frequency of transactions because every trade comes with transaction fees. Choose long-term investments instead of high-frequency trading (HFT) to lower brokerage fees and other costs.
If your portfolio is worth up to ₹4,00,000 in India, you can think about switching to a BSDA or basic service demat account.
Evaluate your broker’s performance and fees regularly. If you are paying high fees or their services are unsatisfactory, you can consider transitioning to a more cost-effective broker that offers better options.
Selecting the ideal broker for a demat account involves striking a perfect balance between cost-effectiveness and the variety of features available. Choose the platform that matches your financial goals and trading style, has lower fees, advanced features and offers personalized support. By assessing the fees, services and benefits, you can make a smart decision to enhance your investment returns in 2025. It is advised to consult a financial advisor before investing.
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A demat account is used to hold financial assets such as stocks, bonds, and ETFs in electronic form. It removes the need for physical share certificates and ensures faster, secure trading in the stock market.
Can I open a demat account without linking it to a trading account?
You can open a standalone demat account to store securities. However, if you want to trade in the stock market, you will need a trading account as well.
Are there any hidden charges I should watch out for?
Some of the common hidden charges include call & trade fees when using customer support and higher AMC after initial promotional periods.
Can we maintain 2 demat accounts?
You can open multiple demat accounts with different DPs.
What is the difference between CDSL and NSDL?
CDSL and NSDL are two depositories in India where your securities are stored, and your demand account is opened at one of these depositories. There is no difference between CDSL and NSDL as both provide the same services and are regulated by the SEBI.
With the wide range of investment options available in India today, a lot of people have chosen the stock market to secure their financial future. A Demat account is essential to participate in the stock market, and individuals usually open one by contacting a stockbroker who is a Depository Participant (DP). But can an investor open a Demat account without a broker? The answer is yes! It is possible to open a Demat account without a broker.
In this article, we will discuss how to open a demat account without a broker, the documents required to open a demat account in India, and its benefits.
What is a Demat Account?
A Demat account is a form of an electronic account that stores stocks and securities in the form of electronic records. This account provides a convenient location for the storage of stocks, bonds, and mutual funds, among other investment instruments. The Demat system in India was created to facilitate the storage and transfer of shares without the need for physical certificates. Some of the inherent features of a Demat account include the following:
Secure Holdings: A demat account makes it convenient for investors to secure different types of securities in one account and eliminates the hassle of handling numerous physical certificates.
Enhanced Efficiency in Share Trades: Buying and selling shares becomes simpler due to the short settlement period.
Lesser Danger: Because the shares are in the Demat account, it eliminates potential dangers like theft, loss or damage to physical share certificates.
Comprehensive Record of All Holdings: An investor has online access to information about his/her holdings, transaction details and his/her account balance within any given time frame.
You might be thinking, “Can I start trading without a Demat Account?” The answer to your question is yes. Investors can open a trading account with a broker to trade securities listed on the stock exchange.
Considering the advancements in technology and the rise of online trading platforms, questions arise regarding the relevance of a broker in the process of opening up a Demat account.
First, we need to understand the difference between a Depository Participant (DP) and a broker. A DP acts as an intermediary between the investor and the depository, i.e., CDSL and NSDL. On the other hand, a broker acts as a link between the investor and the stock exchange. Some of the financial institutions in India offer services of both DP and a broker.
According to SEBI regulations, investors can only open a Demat account with the help of a DP. This makes it possible to open a Demat account with the help of a financial institution that is a DP but not a broker. However, you might think, “Can I buy shares without a broker?” The short answer is no. One must open a trading account with a broker to buy and sell shares.
Opening a Demat account without a broker is an easy task. Below is the step-by-step procedure.
1. Select Financial Institution
First, choose a financial institution that is a Depository Participant (DP) but not a stockbroker. Many banks, financial services companies, and even fintech platforms offer Demat account opening facilities.
2. Official Website
Open the official website of the selected financial institution. Most of them have online account opening procedures in place. Click on a subsection for Demat Accounts entitled “Open a Demat Account” or “Account Opening.”
3. Fill the Application Form
Fill an application in which you provide the following details:
Full name and address and mobile number/landline phone number, Email ID
Source of income and job particulars.
4. Mandatory Documents
You will be asked to submit the following documents :
Proof of Identity
Proof of Address
PAN Card
Passport-sized Photographs
Verification and Activation of Account
After submitting the application and the documents, the financial institution will verify the information. This can take some hours to a few days. Upon verification, you will receive the details of your Demat account, including your login credentials.
1. Proof of Identity: The following documents can be submitted as a proof of identity:
Aadhar card
Passport
Voter ID
Driving License
2. Proof of Address: The following documents can be submitted as a proof of address:
Utility bills: electricity, water, gas, etc.
Bank statement
Rental agreement
Any government document with your address
PAN Card: You cannot open a Demat account without a PAN Card, making it a mandatory document.
Passport Size Photographs: Typically, two passport-sized photographs are required, not older than six months from the date of submission of the application.
Bank Account Information: A canceled cheque or bank statement might be required to link your trading account with your bank account for smooth transactions.
All the documents must be accurate and complete, which will help in speeding up the process of opening an account.
Advantages of Opening a Demat Account Without a Broker
There are many advantages to opening a Demat account without a broker. These are:
1. Cost Savings
Opening a Demat account without a broker helps investors avoid paying charges related to trading. DPs who are not stockbrokers offer a simple fee structure that consists of AMC.
2. Control Over Investments
Brokers usually give out trade recommendations to their clients. Due to the absence of brokers, investors can continue to hold investments without any distractions and have complete control over their investments.
3. Access to the Other Services
Investors opening only a Demat account are usually long-term investors. Investors can take advantage of other services provided by the non-broker DPs, such as loans against securities or other privileges for opening a Demat account with the DP.
The investors can open a Demat account without a broker, which enables the investor to focus on the safe storage of financial assets without worrying about trading. Using the procedure mentioned above, one can easily open a Demat account.
Opening a Demat account without a broker is ideal for investors who just want a safe storage facility for their investments and wish to hold them for a long time. However, if you are thinking, “Can I trade without a broker?” The answer is no, as you must have a trading account with a broker to execute buy and sell transactions.
Frequently Asked Questions (FAQs)
Can we buy shares in India without a broker?
It is not possible to buy shares listed on the stock exchange without a broker.
Can I trade without a Demat account?
You only need a trading account to buy and sell shares, and a Demat account is required to store them electronically.
What are the charges associated with opening a Demat account without a broker?
The charges vary across different DPs, but most of them don’t charge account opening fees. However, DPs charge account maintenance charges to keep your demat account active.
How long does it take to open a Demat account without a broker?
If all details and documents submitted are correct, then it may take a few hours to a few days to open a demat account, depending on the DP’s verification process.
Is it safe to open a Demat account without a broker?
It is safe to open a Demat account without a broker as these DPs are authorized by the depositories to offer Demat account services.
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.
Top 10 Brokers Offering Lifetime Zero AMC in India
Pocketful
m.stock
Dhan
Fyers
Groww
Pro Stocks
Paytm Money
Ventura
Firstock
IND Money
Overview of Top 10 Brokers Offering a Lifetime Zero AMC in India
1. Pocketful
Pocketful is an emerging new-age discount broker by two brothers, Sarvam and Rishabh Goel. It is a subsidiary company of Pace Stock Broking. The founders have experience of more than 30 years. The company offers various services such as broking services in stocks and commodities etc. The company offers free account opening and annual maintenance charges, along with zero delivery fees.
2. m.Stock
m.Stock is a discount broking wing of Mirae Asset Capital Market. This was launched in the year 2022. Mirae Asset Capital Market is a subsidiary of a South Korean financial firm known as Mirae Asset Financial Group. It offers a wide range of products, including equity, futures and options, ETFs, etc.
3. Dhan
Dhan is a tech-driven discount broking platform founded in 2021. The company offers a margin for trading. Along with this, the company offers various advanced trading tools. It also offers investment in a direct mutual fund through its application. Dhan does not charge any fees for opening a demat account.
4. Fyers
This broking firm was founded in the year 2016 and has its headquarters in Bengaluru. It offers a special account for NRIs. The company name refers to “Focus Your Energy and Reform the Self” It indicates the value of the company. Both the web and the trading platform offered by the company have a unified interface.
5. Groww
The company was founded in 2016. This is a Bengaluru-based firm founded by ex-Flipkart employees. In 2017, the company launched its direct mutual fund investment platform. The company is expected to launch its IPO in the coming year.
6. Pro Stocks
The company is a discount broking vertical of Sunlight Broking Limited Liability Partnership. The founders of the company had experience of more than 25 years. The company reduces its cost of operation by reducing its branches. The company offers web and desktop-based trading software.
7. Paytm Money
It is a subsidiary company of One 97 Communication Limited, founded in 2017. The company first launched its direct mutual fund platform in 2018, and later entered into the discount broking business. The company launched its IPO in 2021. The company has its headquarters situated in Noida.
8. Ventura
Ventura Securities was founded in 1994 by two students who were studying Chartered Accountancy. Initially, it was a small setup; later, as time went on it expanded exponentially. Initially, the company was focusing on providing advisory services to HNI clients and later entered into equity broking. The company has its headquarters in Mumbai.
9. Firstock
Initially, the company was known as NCO Securities and Share Broking Private Limited, and it was rebranded as Firstock Broking in 2021. Recently, in June 2025, the company relaunched its new trading platform. The company also has a self-clearing status via the Indian Clearing Corporation Limited. The company offers its services through the CDSL depository.
10. IND Money
The company was founded in 2021 by an ex-employee of Goibibo named Ashish Kashyap. Initially the company was offering only a wealth tracking application. Later, it started offering services including brokering to loan offering, etc. Through this application, one can invest in U.S. Stocks. The company raised funding from various Venture capitalists. The headquarters of the company is situated in Gurugram.
Benefits of a Lifetime Zero AMC Demat Account
The key benefits of a Lifetime Zero AMC Demat Account are as follows:
Cost-effective: As one is not required to pay any annual maintenance charges, it can help one save money over a period of time.
Long-term investor: The investors who prefer to invest for a longer period of time can consider opening a lifetime zero AMC Demat account.
Simplified Structure: A beginner investor can easily understand the lifetime zero AMC cost structure.
No Penalty: In case of no activity in the demat account, an investor is not required to pay any penalty or any additional expenses.
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.
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:
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.
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.
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.
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.
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)
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.
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.
Can I open multiple Zero AMC accounts with various brokers?
Yes, an investor can open multiple zero AMC Demat accounts.
Do lifetime zero AMC demat accounts provide all the benefits of a regular account?
Yes, a lifetime zero AMC demat account provides all the benefits, such as IPO application, trading, and other value-added services like a regular account.
How can a broker earn by offering a zero AMC demat account to its investors?
Zero AMC demat account broker earns revenue from brokerage charges, margin facility, along with fees for other value-added services offered by them.
Do all brokers offer a Lifetime free demat account?
No, not all brokers offer a lifetime free demat account to their investors. They generally charge a fixed fee at the end of each year or quarter for maintaining a demat account with them.
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.
Can I close my lifetime free demat account at any time?
Yes, you can close your account whenever you choose.
Why do the brokers charge AMCs?
Brokers charge AMCs to cover their operational costs, such as maintaining technological infrastructure, providing customer support, etc.
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.
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.
The applicant should be a resident of India and at least 18 years old.
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.
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:
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.
Additionally, an individual can maintain only one BSDA account.
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:
Opening a Basic Service Demat Account (BSDA) is a straightforward process, as mentioned below:
Choose a reliable stockbroker that offers BSDA services and visit their website or branch to obtain the application form.
Complete the form with the necessary details, including personal and financial information.
Along with the application, submit the required documents such as identity proof (Aadhar and PAN card), address proof, and a recent passport sized photograph.
After submission, complete the Know Your Customer (KYC) process.
Once approved, you will receive your BSDA account details, enabling you to start your investing journey.
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.
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.
Contact your Depository Participant (DP) to understand the conversion process.
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.
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.
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)
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.
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.
What charges are associated with a BSDA?
BSDA accounts generally have the lowest charges, with a maximum annual maintenance fee of Rs 100.
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.
Can I hold multiple BSDA accounts?
Individuals can only have one Basic Service Demat Account.
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.
LoginDetails – You will receive your Demat account details after all procedures have been completed and the DP verifies the information.
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:
Visit the depository participant’s website.
Download the application form, fill it out, and provide your PAN as verification.
After finishing this procedure, you must submit a scanned copy of your identity and residence proofs and finish the KYC process.
The brokerage firm will conduct due diligence at their end.
After filling in your details, complete the two-factor authentication process to confirm your phone number and email address.
Then, you will be required to validate your bank account details and ECS payment methods.
After completing all the steps mentioned above, you will receive an email with your Demat Account number on your registered email ID.
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 TaxReturn– 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.
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)
Can a person hold two demat accounts with the same PAN?
Yes, a person can have two demat accounts with the same PAN Card.
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.
Can Income Tax authorities help me identify the demat account number?
No, Income Tax authorities cannot help you identify the demat account number.
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.
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.
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?
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 Investment
HoldingPeriod (Long-Term)
Tax on Long-Term Gains
Equity Shares & Equity Mutual Funds
More than 1 year
12.5% on gains exceeding ₹1.25 lakh (₹1.25 lakh exemption per year)
Debt Mutual Funds
More than 3 years
Income Tax slab rate
Non-Equity Assets
More than 3 years
12.5%
Dividends
N/A
Taxed 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 Investment
Holding Period (Short-Term)
Tax on Short-Term Gains
Equity Shares & Equity Mutual Funds
Less than 1 year
20% flat tax rate, irrespective of income tax slab.
Non-Equity (Debt Funds, Gold ETFs, etc.)
Less than 3 years
Taxed at your income tax slab rate
Dividends
N/A
Taxed 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 year
Entire sale proceeds taxed as STCG at 20% (since the acquisition cost is zero).
Rights Issues (sold within 1 year)
Less than 1 year
Gains taxed as STCG at 20%.
Offset Short-Term Losses
N/A
Can be set off against both STCG and LTCG; carried forward for up to 8 years.
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
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/Transaction
Where to Report in ITR
Applicable ITR Form
Exemptions Available
Credits/Deductions Available
Short-Term Capital Gains (STCG)
Schedule CG (Capital Gains)
ITR-2 / ITR-3
No exemptions
Set 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 Income
Schedule OS (Other Sources)
ITR-1 / ITR-2 / ITR-3
No exemption; fully taxable at slab rate
TDS credit if 10% TDS deducted for dividends
Interest from Tax-Free Bonds
Schedule EI (Exempt Income)
ITR-2 / ITR-3
Fully exempt
Not applicable
Bonus Shares
Schedule CG (Capital Gains)
ITR-2 / ITR-3
No exemptions
Not applicable (Zero acquisition cost)
Rights Issues
Schedule CG (Capital Gains)
ITR-2 / ITR-3
No exemptions
Deduct the cost of purchase of rights shares
Capital Losses
Schedule CFL (Carry Forward Losses)
ITR-2 / ITR-3
Not applicable
Carry forward losses up to 8 years
REIT/InvIT Dividends
Schedule OS (Other Sources) or EI (Exempt Income)
ITR-2 / ITR-3
Exempt if eligible
Not applicable
Securities Transaction Tax (STT)
Not Reported Separately (Impacts CG)
ITR-2 / ITR-3
Not applicable
Not deductible, but required for claiming concessional rates (20% STCG, 12.5% LTCG)
Demat Account Maintenance Fees
Not applicable
All Forms
Not exempt
No 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)
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).
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.
Are the annual maintenance charges of a Demat account tax-deductible?
No, these charges are not tax-deductible.
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.
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%.
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