Have you ever thought about how your valuable investments and shares are safely kept in the stock market world? This safety locker is called the Demat account, it acts similar to a bank account that securely holds your money, as Demat account acts as your digital wallet safeguarding your stocks, bonds and mutual funds in an electronic form.
Demat entered as a game changer as in primitive times stocks, bonds and even mutual funds were given on a paper based certificate which was susceptible to loss, theft or damage. Demat account offers you a seamless, secure and easy to manage online market holdings, that is accessible to you from anywhere at any time.
Demat Account an Overview
A Demat account is an account that holds shares and securities in electronic form, eliminating the need for physical certificates. It simplifies trading, transfer, and safekeeping of investments in the stock market.
Today, having a Demat account is mandatory if you want to invest in the stock market. In the old days, when you bought shares of a company, you would get actual paper certificates. The problem was, these physical certificates could be lost, stolen, damaged, or even faked. Transferring them to someone else was a slow process filled with paperwork. With a Demat account, all these certificates are stored electronically, making investing safer, faster, and hassle-free.
Guide to Demat Account Charges
Demat account charges are not as complicated as they sound. We can break them down into two simple categories, charges from your broker like Pocketful and charges from the government and other bodies.
1. Demat Account Opening Charges
This is a one time fee that some brokers charge you just to set up your account. Many traditional banks and full service brokers still have this fee.
But here’s the great news. At Pocketful, we believe starting your investment journey should be free. That’s why Pocketful has zero demat account opening charges. You can open your account with us and start your journey without paying a single rupee.
2. Demat Account AMC Charges
Annual Maintenance Charges, or AMC, is a fee that brokers charge every year to keep your account active. You can think of it as a small “rent” for your digital locker. This is a charge you have to pay even if you don’t make any trades during the year.
Here Pocketful makes a huge difference. We want you to feel comfortable, whether you invest daily or just once a year. Pocketful has zero demat account AMC charges. This means you save money every single year, money that can stay in your pocket or be invested for your future.
Many other brokers in the market charge an AMC, which can range from Rs.300 to over Rs.900 every year. This is a recurring cost that our users simply don’t have to worry about.
3. Brokerage and Transaction Fees
Brokerage is the fee your broker charges when you buy or sell shares. This is one of the most important demat account fees to understand because it can directly affect your profits.
There are two main types of brokers:
- Full-Service Brokers : They often provide research and advice but charge a percentage of your trade value. So, the bigger your investment, the higher the fee.
- Discount Brokers (like Pocketful) : Provides you a great platform for you to invest on your own, but at a much lower cost. They usually charge a flat fee, which makes the cost predictable.
Here is Pocketful’s simple and transparent brokerage structure :
- Equity Delivery : When you buy shares and hold them for more than a day, it’s called a delivery trade. At Pocketful, the brokerage for this trade is Rs.0.
- Intraday Trading and F&O : If you buy and sell on the same day (intraday) or trade in Futures & Options, we charge a flat fee of Rs.20 per executed order, or 0.03% of the order value, whichever is lower. It’s simple, flat, and predictable.
4. Government and Depository Charges
These charges are not from your stockbroker. They are a part of the system for every investor in India, no matter which broker you choose.
DP (Depository Participant) Charges : When you sell shares from your Demat account, a small fee is charged by the depository (CDSL) and the DP (Pocketful). This is for the service of debiting the shares from your account. At Pocketful, this charge is just Rs.13.5 + GST per transaction.
- Taxes (STT & GST) :
- STT (Securities Transaction Tax) : This is a small tax paid directly to the government when you trade on the stock exchange i.e. 0.1% on both buying and selling.
- GST : This is the standard Goods and Services Tax, which is 18% applied to the broker’s fees (like brokerage, transaction charges, SEBI turnover fees and other taxes).
- Stamp Duty : This is a tax charged by the state government on all your ‘buy’ transactions. (0.015% on turnover of buy delivery orders)
- Exchange Transaction Charges : The stock exchanges (NSE and BSE) charge a very tiny fee on your trades for providing the trading platform. (BSE: 0.00375% NSE: 0.00297%)
- SEBI Turnover Fees : This is a small fee charged by Securities and Exchange Board of India when you buy or sell in the stock market. This fee is generally collected by your broker to cover regulatory and developmental expenses of SEBI. (0.0001% of the turnover)
To make it even simpler, here is a quick look at Pocketful’s main charges:
| Charge Type | Pocketful’s Fee |
|---|---|
| Account Opening | ₹0 |
| Annual Maintenance (AMC) | ₹0 |
| Equity Delivery Brokerage | ₹0 |
| Intraday & Futures Brokerage | ₹20 per executed order or 0.03% of turnover, whichever is lower |
| Options Brokerage | ₹20 per executed order |
| Interest Rate for MTF | 5.99% upto Rs, 1 Lakh which is lowest among the peers |
Read Also: Demat Account Charges Comparison
Advantages and Disadvantages of a Demat Account
Advantages
- Safety : Your investments are held digitally, so there’s no risk of theft, loss, or damage.
- Convenience : You can access and manage your portfolio from anywhere, at any time, using your phone or laptop.
- Speed : Buying and selling happen quickly, with shares getting credited or debited from your account in just a day or two (T+1 settlement).
- Easy Tracking : You can see all your different investments like shares, bonds, mutual funds at one single place.
- Loan Facility : You can use the securities in your Demat account as collateral to get a loan from a bank if you require funds.
Disadvantages
- Costs are Involved : There are multiple charges attached as we’ve discussed earlier. But by choosing a discount broker like Pocketful, you can minimize these charges, especially with our zero AMC policy.
- Requires Technology : To operate a Demat account, you need a smartphone or computer and an internet connection. This can be a challenge for people who are not comfortable with technology.
- Risk of Over trading : Because it’s so easy to buy and sell, some people might be tempted and can do emotional trading too often without a proper plan. This can lead to losses.
Key Factors to Consider
- Go Paperless : Always choose email statements and contract notes. Asking for physical copies can lead to courier charges.
- Trade Online : Placing orders over the phone with a dealer is called ‘Call & Trade’, this service usually has an extra charge. At Pocketful, it’s Rs.25 + GST per order. Using our free online platform is a smarter choice.
- Consolidate Your Accounts : If you have multiple Demat accounts with other brokers that you don’t use, consider closing them. This will reduce confusion and help you avoid any maintenance charges they might be adding.
- Intraday Timings : If you are an intraday trader, make sure to close your open positions before the market closes. If you don’t, the broker will automatically close them, which can attract an ‘auto-square off’ penalty. At Pocketful, this is Rs.25 + GST per order.
Read Also: What are Account Maintenance Charges (AMC) for a Demat Account?
Conclusion
With a transparent partner like Pocketful, these charges are not hidden but are clear and manageable part of your plan. Our zero demat account opening charges and zero demat account amc charges are designed to remove the biggest cost barriers, especially for new investors.
Your financial future is in your hands. Now that you understand the costs, you can start your journey with confidence. Join the club of zero fees and infinite possibilities with Pocketful.
Frequently Asked Questions (FAQs)
Can we open more than one Demat account?
Yes, you can open multiple Demat accounts with different brokers. However, you cannot open more than one account with the same broker. All your accounts are linked to your single PAN card, which helps in tracking.
What is the main difference between a Demat and a Trading account?
Trading account is the ‘shopping cart’ you use to place buy and sell orders in the market. The Demat account is the ‘digital house’ where you safely store the shares you have bought, you need both to invest.
What happens to the shares in my Demat account if something happens to me?
Your Demat account comes with a nomination facility. You can appoint a nominee (like a family member) who will receive all the securities in your account in case of an unfortunate event. This ensures a smooth and easy transfer of your wealth.
Are shares safe with a discount broker?
Absolutely. Your shares are not held by Pocketful directly. They are held in your name with the central depository (CDSL), which is regulated by SEBI. This is true for all brokers, whether they are discount or full-service brokers.
Do I have to pay charges even if I don’t trade?
With many brokers, you have to pay the Annual Maintenance Charge (AMC) every year, even if you don’t trade at all. This is a key advantage with Pocketful, since our AMC is zero, you pay nothing if you are inactive. You only incur charges like DP charges when you actually sell shares.
