Demat Account Charges:Does your broker charge high?
In this article, I am going to explain how many charges you have to pay for your demat account with any stockbroker in India.
There are several charges applicable other than Brokerage for Stock Exchange Transactions. The charge is applicable to your demat and trading account. I am sharing the list of charges levied to your demat account.
We often consider only brokerage charges but there are so many other charges which are levied on stock market transactions apart from the brokerage charges.
As a bonus, in this article, I’ll share a trick that will help you to wave off the account maintenance charge applicable to your demat account every year.
It is mandatory to open a demat account for a person who invests in the stock market. Besides stock holding, you can also hold mutual funds, bonds, debenture, NSC (national saving certificate) in demat form.
We also have launched a tool to compare & filter stockbrokers in India which has too many filters to find the stockbroker depending upon features. This tool will help you to find the best stock broker for your customized requirement for opening a demat & trading account.
List of Demat account charges
Below I have mentioned all the charges applicable to your demat account that you should know.
Brokerage Charges
The brokerage charge varies too much & depends totally upon the stock brokerage firm. Stockbroker charges either based on total turnover value (usually a full-service broker) & few stockbrokers charge flat rates for each transactions. (known as discount broker).
Now, most of the peoples are opening an account with discount brokers, as discount broker charges very less brokerage compared to a full-service broker
Demat account opening charge
Account opening charges are a one-time fee. You have to pay this charge when you open a demat & trading account with any stockbroker. Nowadays demat account opening charges very nominally compared to earlier.
Account opening charges range between 200-800 rupee INR. Even a few brokers are offering free demat and trading account opening to lure new costumer.
Annual maintenance charge
You need to pay this charge to stockbroker every year for maintaining your demat account with them.
Usually, this charge is applicable on Pro-rata basis. This charge will be automatically deducted from your DEMAT account balance.
You can open BSDA (basic service demat account) with any stockbroker if you have a holding value under Rs. 50,000 wherein no annual maintenance is charged.
If you have multiple demat and trading accounts you can save a lot of annual maintenance charges by converting your new & existing account into BSDA account.
Account maintenance charges usually vary between 300 rupees to 1000 rupees yearly. Future stock brokers also offer free demat annual maintenance charges.
DP (Depository participant) charges
DP charges are applicable whenever you sell any share from your demat account. This charge does not depend upon the total number of shares you sell. It depends upon per scrip (irrespective of quantity) on the day when the share is sold from the demat account.
Either you sell 1 share of particular script or 1000 share you will be charged the same DP charge on that day for that particular scrip.
You can understand DP charges as:
- Suppose you have 100 shares of ICICI Bank in your demat account. You sell 100 shares in a day or you sell 50 shares, you will be charged the same DP charges for that day.
- If you have shares of two different companies in your holding and you execute sell order on both scripts then you will be charged DP charges for each script transaction.
It means that DP charges don’t matter upon share quantity it depends upon share scrip.
DP charges usually vary between 5 INR to 40-50 INR per scrip.
Securities Transaction Tax (STT)
STT is a type of direct tax payable upon total turnover value any exchange. These Tax rates are decided by the central government.
This Tax depends upon the type of security traded and whether it’s buying or selling transaction. In the case of the intraday transaction, STT will be different from the delivery transaction.
This tax value for the delivery-based transaction (buy & sell) is 0.1% of the total turnover. In the case of Intraday transactions, there is no charge for buy order and for sell trade it is 0.025% of the total turnover value.
Exchange Charges
On every transaction through stockbroker exchange levy small amount charge on each turnover for providing a platform to buy & sell shares. This charge varies depending upon Exchange to Exchange & entirely depends upon the type of instrument traded.
SEBI Turnover Fees
Stock market regulator – SEBI levies charge on both sides (Buy & Sell) transaction. Currently, SEBI Charges Rs.20 per Crore or say 0.0002% on the total turnover of the Transaction.
Clearing Charges
This fee charged by the broker to pay towards clearing house. This helps stockbroker to settle trades with exchanges.
This charge usually ranges between Rs. 200 to 2000 per crore on option premium & between Rs. 20 to Rs. 200 per crore on futures.
Tax
Besides all the above charges you will be levied by 18% of IGST slab on brokerage, AMC & all other transaction charges which can be breakdown as:
- CGST: 9% of Brokerage, Transaction & Clearing Charges
- SGST: 9% of Brokerage, Transaction & Clearing Charges
Stamp Duty
The stamp duty applicable depends on the state of the client’s correspondence address he/ she provided on correspondence address proof when opening an account.
Every contract note requires to be stamped & the main purpose of this tax is to raise revenue for the local governments. This stamp charge vary based on the client’s state of residence.
Now you have got an idea of what other charges you are going to pay for a particular trade.
Charges should not be the only criteria while you open trading and demat accounts with any stockbroker. Yes, it’s also true that we can’t neglect demat account charges as it is a very important factor to look for.
