Information Regarding Demat Account

Demat account, short for dematerialized account, is an account needed for keeping securities in a dematerialized form. In India, a demat account is mandatorily required to be able to invest and trade in the Indian Share Exchanges. Possession of demat account has been produced compulsory by SEBI, an abbreviation for the Securities and Exchange Board of India, which is the authoritative and regulatory body for the country’s share exchanges.

As specified by the SEBI, the demat account is to be opened with a Depository Participant (DP). All of the banks and brokers offering depository services are known as DP. However, the contrary is doesn’t hold true.

You’ll find particular charges levied on the customer by a Depository Participant (DP), which holds demat account for its customers, for possessing a demat account. You can find four first charges levied on the customer, namely demat account opening fee, annual maintenance charges, brokerage or transaction fee, and custodian fee. In addition to these four, a DP also levies a charge for the conversion of shares from its physical form to the electronic form, or from electronic to physical form. This fee is different for both remat and demat instructions. For dematerialization of securities, many of the DPs levy a fixed charge on each such request along with a fee that varies dependant on the amount of certificates needed. The fees levied by other DPs are fully variable.

Nevertheless, no fee is chargeable on a BO (Beneficiary Owner) by a DP if the BO moves all of the securities held in his demat account to a similar DP’s numerous other branch or to the the other DP of another or same depository. On the contrary, this is applicable only once the BO Account(s) at transferor DP and at transferee DP is same in every single respect. If the BO Account at the transferor DP happens to be a joint account, then the BO Account at transferee DP also should be a joint account, with the identical ownership sequence.

The DPs are allowed to revise their charges. Nevertheless for that, the DP has to give a notice of 30 days in advance. Other than that, DPs also charge service duty for their customers. Hence, it is always suggested to maintain all your accounts with a single depository participant. This helps in generating the tracking of funds gains liability easier. It’s because; the determination of keeping period varies from DP to DP, hence, affecting the calculation of capital profits tax.

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