DP or demat transaction charges are levied by your stock broker when you sell your stocks from your demat account maintained with a depository.
A depository is an institution/organization which holds securities with it in Demat form. In India we have two depositories, CDSL (Central Depository Securities Limited) and NSDL (National Securities Depository Limited).
These two depositories are registered by the Indian government to hold multiple forms of securities like stocks, bonds, ETFs, and more in Demat form.
Depository Participant (DP) is the agent or the registered stockbroker of such depositories.
In India, in order to provide Demat accounts to clients, stockbrokers need to become a depository participant. They need to pay a membership fee to NSDL and/or CDSL and incur certain other costs in order to become a depository participant.
Stock brokers like Zerodha, Upstox, Angelone, HDFC securities, Motilal Oswal, FYERS, Alice Blue, IIFL Securities, Kotak Securities, ICICI securities, Groww and all others have CDSL and/or NSDL as their depository.
Depository Participant (DP) charges are levied by the depositories (CDSL/NSDL) and depository participants (Zerodha / Upstox / Angel broking / Groww / HDFC securities / others). It’s a charge applicable whenever you sell shares from your DEMAT account. It’s also referred to as DP charges or demat transaction charges.
This means, demat transaction charges are levied on stock movement out of the DEMAT account which is managed by depositories (NSDL or CDSL).
It is like how your stock broker charges brokerage commission for buying and selling of shares. DP charges are the revenue source for depositories and its participants.
DP or Demat transaction charges can vary based on the services of depository participants you use to trade in the stock market. If you have multiple trading and demat accounts, then depository participant charges will vary from broker to broker.
How DP or demat transaction charges are levied
Here is a list showing DP or demat transaction charges per scrip per day levied by depository and various discount stock brokers;
- Zerodha: Rs 13.5 + GST
- Upstock: Rs 18.50 + GST
- Angel broking: Rs 20 + GST
- 5paisa: Rs 12.5 + GST
- Fyers: Rs 12.5 + GST
- IIFL Securities: Rs 20 + GST
You can check the respective stock broker’s site for further details.
Let us understand how demat transaction charges are levied with an example.
Suppose in our case the demat transaction charge is Rs. 18.5 plus GST.
When you sell 100 shares of XYZ company limited, your DP or demat transaction charges for that day will be Rs 18.50 (excluding GST). GST is 18% on your DP charges.
Instead of selling 100 shares in one order, suppose you have sold 25 shares of XYZ company limited in the morning session and 75 shares of XYZ company limited in the afternoon session, in this case your DP charges will be the same i.e. Rs. 18.50 (excluding GST).
Suppose, in addition to 100 shares of XYZ company limited, you are also selling 200 shares of ABC company limited on the same day, the total DP charges in this case will be Rs. 37 plus GST (i.e. 18.5+18.5).
DP charges will not be shown in your contract notes as it captures all trading and its related charges executed on the stock exchange.
You will find demat transaction charges in your ledger maintained with the stock broker.
Depository Participant (DP) charges are also levied on BTST trades.
BTST means Buy Today Sell Tomorrow. For example, you purchase 1.000 shares of XYZ company limited on Tuesday and sell the same on wednesday.
In these types of BTST trades, DP charges are applicable as shares are credited and debited from your demat account.
There are no demat transaction charges for equity intraday, and equity futures and options.
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Disclaimer: In addition to the disclaimer below, please note, this article is not intended to provide investing or trading advice. Trading in the stock market and in other securities entails varying degrees of risk, and can result in loss of capital. Most investors and traders lose money. Readers seeking to engage in trading and/or investing should seek out extensive education on the topic and help of professionals.