Depository Participant charges are mainly levied on all the sell transactions associated with Demat Account. These charges are mainly exclusive of the brokerages and will not get reflected in the contract notes. These DP charges are targeted to be revenue sources for not just the depositories but for its participants too.
In layman’s terms, the DP charge can be a flat transaction fee, and it doesn’t deal with the quantity sold. So, the fee is charged per scrip, and it does not depend on the volume as sold.
The charges will always remain the same, whether you are getting to sell 1 share or 100.
Who can levy the DP charges?
Depositories and the depository participants can levy the DP charges. In case the stock remains to be a part of Nifty, the tax will be imposed by NSDL or National Securities Depository Limited.
- If the stock is a part of the BSE, CSDL or Central Depository Securities Limited will levy the tax.
- Depository participants will play the role of a mediator between the investor and depositories.
- Financial institutes, banks, and stockbrokers are some of the examples of depository participants.
- Most of the time, the DP will levy four different kinds of fees for Demat account transactions. Those will be the annual maintenance fee, transaction fee, custodian fee, and account opening fee.
Why do you think DP charges are levied?
It is always a good idea for the stockbroker to play the role of the depository participant for offering Demat accounts to the clients. On the other hand, they get to pay one membership fee to the NDSL or the CDSL, along with multiple other fixed costs and advanced prepaid-based transaction charges. It is time for the brokers to pass these charges to their respective customers along with an added fee for reclaiming the expenses.
The amount of DP charges to consider:
For all sell transactional charges, the DP charges remain the same. For the CSDL, it will be 13 rupees + 5.50 rupees, and for the NSDL, the charges will be 13 rupees + 4.50 rupees.
Now, the charges under the DP can vary, depending on the participants. It will also vary based on the banking institution to consider. The charges are more or less exclusive of all taxes. Some institutions might offer zero-brokerage charges for a few days initially. So, now you can open your account to enjoy Online Stock Trading easily!
Can you avoid paying the DP charges?
In case you are taking the delivery of securities within your Demat account, you cannot avoid paying the DP charges at any cost. In case you plan to close the intraday position and then participate in the future segment or BTST trading, then you might be able to avoid paying the depository charges.
But, in most cases, you might have to think about DP charges before you even start working with any brokerage firm. Depository participants are mainly the stockbroking firms, which will offer investors the depository and investment services. So, you might want to take help with that!