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A Demat Account is an account that allows investors to hold their shares in an electronic form. The abbreviation of a Demat Account is Dematerialisation Account. To open a free Demat account online, you need to upload few documents. A Demat account number is compulsory to enable electronic settlements of all the trades.
A Demat account is similar to a bank account, where you hold your money and respective transaction entries are done in the bank’s passbook. Similarly, securities are held in electronic form and are debited or credited accordingly from a Demat Account. A Demat account can be opened with zero balance of shares.
NSDL operates under NSE and CDSL operates under BSE. A depository is similar to a bank where securities are held in an electronic form.
When investors buy shares, their respective broker credits them from the investor’s account accordingly and an investor can view their holdings online or in the holding statement.
When an investor needs to sell shares, he/she needs to give a delivery instruction note in which details of shares sold are filled, to their respective broker. The account is debited and the investor is paid for the shares being sold. In the case of online trading, the account will spontaneously reflect the stocks sold and the amount credited to the account.
There is no minimum age to start investing in the stock market – you do not need to be 18 years of age to hold a demat account. A minor can also hold a demat account, given it is open by the parents or the appointed guardian after submitting their respective documents. Once he/she turns 18 years of age, the depository participant will send an advisory to the individual in order to obtain certain KYC (Know Your Client) documents to open and transfer details to a new account.
PAN Card is the most important document required to open a demat account. You will have to submit a copy of your PAN card along with other KYC documents while opening a demat account. You can choose to open your demat account either online or offline.
In order to be eligible to open a demat account, you will need to submit other documents in addition to you PAN card for identification purposes –
Fill up your personal details via our secured online account opening platform.
Fill up your DOB, PAN, personal and bank details, upload your documents.
E-sign your application via Aadhaar OTP. You are done!
Any individual who is a resident of India and 18 years old or above is eligible for opening a demat & trading account, provided he/she has a PAN card. After verifying your details, your process of opening a demat account begins.
If you are opting for online KYC, your demat account will be activated in less than 24 hours. However, if you opt to open your demat account by submitting physical documents, it will take 2-3 days for your demat account to be active.
Yes, you can open a demat account online. You have to choose a brokerage firm, submit demat account opening form, submit required documents and complete e-KYC in order to open a demat account online.
Yes, you can open a demat account free of cost. However, you will have to pay brokerage in case you wish to make any trades.
Yes, you can have multiple demat accounts. However, you cannot open multiple demat accounts with the same stockbroker.
A demat account can be opened free of cost. However, one has to pay a nominal annual fee or account maintenance charge to the stockbroker in order to keep your account active.
No, you don’t have to any charges on your demat account on a monthly basis. However, one has to pay a nominal annual fee or account maintenance charge to the stockbroker in order to keep your account active.
You will have to pay income tax on the gains you have made by selling your shares that you hold in your demat account. Long-term capital gains (LTCG) over Rs 1 lakh on listed equity shares per financial year are taxable at the rate of 10% without the benefit of indexation. STCG covered under section 111A is charged to tax @ 15% (plus surcharge and cess as applicable).
A rate of 15% will be charged as income tax on short-term capital gain on shares that fall under this category. They would further attract surcharge and cess where ever applicable.
If you treat your income as capital gains, expenses incurred on such transfer are allowed for deduction. Also, long-term gains from equity above Rs 1 lakh annually are taxable, while short term gains are taxed at 15%.
While you cannot avoid demat charges, you can certainly minimized your demat charges if you open a demat account with a broker who offers discount brokerage plans.
No, tax is not automatically deducted from the demat account. Deduction is made available for individuals under Section 80C of the Income Tax Act and you need to duly file the taxes annually.
Yes, you can withdraw all money from your demat account and credit it to your linked bank account in maximum 3 working days.
There is no limit on the number of shares that you can hold in your demat account. You can hold any number and value of securities in your demat account.
