Is Opening Free Demat Account with No AMC Charges Possible?

Is Opening Free Demat Account with No AMC Charges Possible?
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Every investor requires a Demat account to invest in the financial market. A Demat Account, also known as a Dematerialized account is where investors can hold their shares and securities. It helps to purchase new stocks and hold them safely in an electronic format. 

How To Open A Free Demat Account?

Opening a Demat account online is simple and fast provided an investor has all the documents handy. Most online brokers allow new investors to open a free Demat account online. The documents required for opening an online account are:

  • Aadhar Card/Voter Card/Passport/ as a proof of identity
  • Voter Card/Passport/Driving Licence/Utility bills as a proof of address
  • Recent salary slip/Form 16/ ITR Copy as a proof of income for Derivatives
  • PAN Card for opening a trading account along with the Demat account

An investor would also require a valid photograph, canceled cheque, and signature on a white paper for further documentation. 

What Are AMC Charges?

To maintain the Demat account, Brokers charge an annual maintenance fee, also known as AMC charges (Account Maintenance Charges). The AMC charges can be between Rs 300 to Rs 900 depending upon the type of broker. It can be paid quarterly or annually by an investor. 

Other than the AMC charges, there are:

  • Brokerage Charges: For every buy/sell order, brokers charge a small amount of fees called the brokerage charges. 
  • Fund Transfer Charges: For fund transfers using payment gateway, investors have to pay a small amount of transaction charges during buying/selling a share.
  • Depository Participant Charges: In trading, investors require to pay Depository participant charges commonly known as DP charges. For every Sell order/transaction these charges are levied. 
  • Call and Trade Charges: Investors can directly call their Relationship Manager to buy/sell shares. For every trade (buy/sell) done through calls, brokers levy charges per trade from investors.
  • Auto Square off Charges: For Intraday traders, the trades are automatically squared off every day before the market closing. Many brokerage firms levy auto square off charges from traders.

Can You Open A Demat Account Without AMC charges?

Many brokers allow free demat account with no annual charges for new investors. This is a common bait for online Demat account applicants. The AMC charges in such cases are usually not applicable on the first year of account opening, but it is charged annually or quarterly after the completion of one year.  

Many brokers also provide Lifetime Free Demat Accounts to Investors. Here, investors have to pay a one-time brokerage fee (which can be around Rs 2500- Rs 3000) while opening a free Demat account with the broker.

Conclusion

To invest in the financial market, opening a Demat account with a stockbroker is mandatory. Though one can open a free Demat account online, investors have to pay the AMC charges to maintain the account. This can be done annually, quarterly, or as a one-time payment during account opening. 

Note: If an investor opens a free Demat account, but does not use the same, he/she will continue to attract an annual maintenance charge (AMC charge) until the Demat account is closed by the investor.



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