If you are looking to step foot into the stock market, there are two crucial components you need to possess; access to a Demat and Trading Account.
With the power of both these accounts combined, investors can have a seamless trading experience. There is one crucial thing that investors need to remember when they want to open a Demat or Trading account; trading and Demat account charges.
To help you get more in-depth knowledge about these charges, here’s a breakdown of everything you should be aware of.
Charges in Trading and Demat Accounts
Let us look at a breakdown of all the charges involved in both the Demat and trading account
Trading Account
Trading Account Opening Charges
- This is a one-time fee that stockbrokers levy when traders open trading account with them
- The charges can range between ₹500 to ₹999.
- The charges above, however, exclude taxes like GST.
- Many stockbrokers also offer the benefit of a free Demat account for the first year, with nominal opening charges from the next.
Trading Account Processing Charges
- These are the charges that stockbrokers charge traders to process the trading account opening application.
- This trading account charge is not levied by many stockbrokers.
Trading Account Maintenance Charges (AMCs)
- The AMC is a fee that is charged every year by the stockbroker
- The main aim of collecting these charges is to fund the services and maintenance of the trading account.
- Not all stockbrokers charge an Account Maintainance Charge
Fund Transfer Charges
- To purchase securities in the stock market traders need to transfer funds into their trading account
- These funds are transferred from a trader’s bank account to their trading account
- To carry out such a transfer, the stockbroker charges a fee from the investor to offset any potential gateway costs the brokerage might incur.
STT or Securities Transaction Tax
- The National Stock Exchange or NSE levies the STT when traders buy and sell stocks
- STT for intraday trading stands at 0.025% or ₹25/lakh on selling.
- STT on equity delivery is 0.1% or ₹100/lakh on selling.
- For options trading, the STT stands at 0.125%/an option’s intrinsic value when exercised
- When shorted, it stands at 0.1% of the premium.
- For future trading, the STT stands at 0.02% or ₹20/lakh on selling.
Turnover Charge
- Levied by NSE at 0.00322% and BSE at 0.00375% on buying and selling both.
- These charges are valid on intraday, at a lower rate on futures and options too.
- The broker collects this charge on the exchange’s behalf.
GST
- GST on trading is applicable on intraday, futures, options and delivery transactions
- It is levied on the total at 18% of the transaction as well as brokerage charges.
SEBI Charges
- Charges are levied by SEBI ₹10/Crore on delivery of equity
- This rate is the same across intraday, futures and options
Stamp Duty
- The stamp duty is payable to the state government and is collected by the broker.
- This charge differs across states.
- On buying in equity delivery, stamp duty stands at 0.015% or ₹1500/crores
Demat account:
Demat Account Opening Charges
- During the Demat account opening process, a lot of brokers provide Demat accounts free of charge for the first year
- They will charge a one-time fee, however, to carry out the DDPI agreement.
Annual Account Maintenance Charges
- Demat accounts also come with AMC, like trading accounts.
- The AMC can vary from ₹300 to ₹900 per year.
Debit Cost by Exchanges
- Debit costs are levied by the NSDL AND CDSL
- Brokers or DPs can charge up to ₹21/debit for each transaction.
Dematerialization Charges
- Dematerialisation or rematerialisation charges are levied on the traders per folio basis.
Conclusion
When you are looking to open a Demat and trading account, it is crucial that you also be aware of the trading and Demat account charges associated with them. This will help you compare DPs and see where to open your accounts so that these charges don’t end up eating into any potential profits you might make trading.