write about expenses of demat account
Answers
Answer:
You need to pay a fee every year. Usually, there are no charges for a basic demat account with a balance of up to Rs. 50,000. ... 50,001-2 lakh would have to pay anything between Rs 100 and Rs 750, depending on the number of transactions you make.
Answer:
All you need to know about demat account charges
Money buys comfort. It is no different when it comes to trading in stocks. Unlike earlier when you had to go through the rough and tumble to buy and sell shares, the entry of demat accounts in 1996 eliminated the tedium of paperwork. Now you can invest in shares without getting up from the armchair.
No longer do you have to purchase share transfer stamps, visit the company’s registrar to get shares transferred or worry about share certificates being stolen. The demat account — which is now mandatory for stock trading — takes care of everything.
However, as there is no free lunch in life, you need to pay a small sum to make your life comfortable. Same is the case with demat accounts. So here is a list of charges you need to pay when you open a demat account.
Opening charges
Opening charges are nominal or nil. Some banks do it for free if you open a 3-in-1 account, where you can open a savings account, demat account and trading account in one go.
Safety charges (Custodian fee)
Earlier, you would have had to constantly worry about keeping share certificates safe. However, demat accounts have erased such anxieties. Your shares can no longer be stolen as they are kept in an electronic format. Depository participants (DPs) and banks charge a custodian fee for holding them safe. It is usually charged annually unless specified otherwise.
Annual maintenance charges
You need to pay a fee every year. Usually, there are no charges for a basic demat account with a balance of up to Rs. 50,000. Those with holdings worth Rs. 50,001-2 lakh would have to pay anything between Rs 100 and Rs 750, depending on the number of transactions you make. Some DPs may also charge quarterly fees, while others may charge a lifetime fee of over Rs. 2000 and above. When the value of transactions is above Rs. 2 lakh, the annual charge may go up to Rs. 2,000-2,500.
Transaction charges
Some DPs levy a charge either based on the number of transactions you make or a flat rate for the entire month. Though such charges vary too, some DPs (discount brokerages) tend to charge roughly Rs 1.5 for each share you trade.
Demat and remat charges
DPs charge a fee to dematerialise or rematerialise physical shares. Dematerialising can cost around Rs 5 per certificate, while rematerialisation could cost you roughly Rs. 25 for every certificate.
DPs may levy credit charge and mailing charges for non-periodic statements. Besides, you would also be charged goods and services tax (GST) at 18%. This is charged on the brokerage as well as transactions you make through your demat account. Now that you know the charges levied by DPs, you can go ahead and open a demat account.