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Complete Details On Trading And Demat Charges

Adele Parham

To start investing in the Indian stock exchange, the very first thing you would require is a demat and trading account. It is impossible to trade in any financial market if you do not have any of these accounts. 

As you know how beneficial a Demat account is for investors. Demat account takes care of everything. You can access securities in your Demat account online across the globe anytime. Its entry in the stock market has saved you from a long process to buy and sell shares. You do not need to purchase share transfer stamps, thereby reducing the cost for investment. Demat account charges cover all the account maintenance services offered by the depository participant (DP). 

The Demat account charges will depend on what type of brokerage services you require to invest in the stock market.

Now there is a list of common charges that an investor should be aware of while entering the Indian stock market. 

1. Brokerage Fee

It is the most commonly known charge and the biggest source of income for brokerage houses. Brokerage firms charge a commission for the services that they provide. 

2. Demat Account Charges

A nominal fee has to be paid by you while opening a demat account. All brokers have different charges. The fee depends on the brokerage firm that you choose. Generally, the fee ranges between Rs.300 to Rs.700. 

3. Call and trade Charges

If you wish to place an order by calling the help desk of an internet broker you will have to pay a fixed amount. The mount will be written on the agreement given to you while opening a demat account.  

4. Account Maintenance Charges (AMC)

The brokers charge an annual fee to maintain your demat account. That fee is called Account Maintenance Charge. 

5. Depository Participant Charge

When you sell any share, a certain fee is debited from your demat account at the end of the day. 

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6. Transaction/Turnover Charges

It is charged by the exchanges (National Stock Exchange, Bombay Stock Exchange) of the country on the full traded value. 

7. Stamp Charges

As per the Indian Stamp Act 1899, for every transaction that includes the transfer of assets from one party to another, a certain percentage of total value has to be paid to the government. 

8. Goods and Service Tax (GST)

A tax is levied by the government on the services that are offered by the broker. In this case, 18% tax has to be paid on brokerage plus transaction cost. 

9. Securities and Exchange Board Of India (SEBI) Charges  

The regulatory body charges a flat fee on the services provided. Rs.10 per crore is charged by SEBI for regulating the market and making policies. 

10. Pledging Charges

If you wish to do trading in the market, then you can borrow some money from the broker. The process of borrowing funds is called pledging and to do so you have to pay a fee. This fee is called the Pledging fee. 

11. Payment Gateway Charges

To deposit money into the trading account, you will have to use a payment gateway that is provided by the bank. You will have to pay a fee if you are using the payment gateway to transfer the funds from the bank to the trading account. (UPI transfers are free) 

12. Delayed Payment Charges

There are two scenarios in which you can be charged with a delayed payment charge; 

  • If you have utilized more funds than the available amount then your account will show a debit balance. For delay in the payment, interest would be charged. 
  • If you have used more than 50% of the collateral issued to you, then you need to pay back the excess amount. Interest is charged on the extra amount that is used. 
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These are the most important charges that an investor needs to be aware of while entering into Indian Stock Markets. Before opening a demat and trading account you need to clarify these charges with your broker and it is a better way to know about any hidden charges.  

Usually, discount brokers do not charge any commission if you wish to take a delivery trade. The majority of the charges listed above are for intraday or derivatives traders. 

Also read:- Important Guidelines To Buy Unlisted Shares

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