What is a demat account in simple words?

It is an electronic account that holds your shares, mutual funds, bonds, and ETFs in digital form. Like a bank account holds money, a demat account holds your investments.

How do I open a demat account online?

Pick a broker, then apply with your PAN, Aadhaar-linked mobile, and bank details, verifying through OTP and a quick video KYC. It usually takes 15 minutes to apply and is approved within 24 to 48 hours.

What is the minimum amount to start investing?

There is no minimum to open a demat account, and many brokers charge ₹0 to open. You can start buying shares with as little as the price of one share, sometimes under ₹100.

Do I need a demat account for mutual funds?

No, for direct mutual funds you can use the AMC website or platforms like Kuvera and MFCentral, where units sit in a folio. You only need demat if you buy mutual funds through a stockbroker.

How do I transfer shares from one demat to another?

Use the CDSL Easiest or NSDL e-DIS online transfer, or submit a Delivery Instruction Slip to your current broker. An off-market transfer between brokers typically takes 3 to 5 business days.

How do I close my demat account?

Clear any pending dues, move out your holdings, then submit the closure form to your broker online or offline. Closure is free and usually completes within 7 to 10 days.

What are DP charges and why only on selling?

DP charges of ₹13.5-20 are levied by NSDL or CDSL each time securities leave your demat, which happens on a sell. Buying credits your demat instead, so no DP charge applies on purchases.

What is BSDA and how do I get it?

BSDA is a low-cost demat for small investors: nil AMC up to ₹4 lakh and ₹100 a year for ₹4-10 lakh. From 31 March 2026 it is opened by default for eligible investors unless you choose a regular account.

Can I have more than one demat account?

Yes, you can hold demat accounts with different brokers, but not two with the same broker on one PAN. Each account may carry its own AMC, so avoid opening more than you use.

What is the tax on stock market profits?

Short-term gains (under 12 months) are taxed at 20%, and long-term gains above ₹1.25 lakh a year at 12.5%. Dividends are taxed at your income slab.

Which is the best demat account for a beginner?

Groww and Angel One suit beginners with their simple apps and zero AMC. Active traders often prefer Zerodha for its platform and charting.

Are my shares safe if the broker shuts down?

Yes, your shares sit with the depository (NSDL or CDSL), not the broker, so a broker failure does not touch them. You simply transfer holdings to a new broker.

What is a dormant demat account and how do I reactivate it?

A demat account becomes dormant when it has no activity for a long period. Your shares stay safe; only new transactions are frozen. To reactivate, contact your broker and complete a fresh KYC or reactivation form. They will restore access once your details are verified.

How do I find my demat account number using PAN?

Download the Consolidated Account Statement from NSDL or CDSL using your PAN. It lists every demat account linked to you. Your number is also on broker statements and inside the broker app under account details. Support can also share it after verifying your identity.

How do I write a demat account closing letter?

Most brokers now let you close online, so a letter is rarely needed. If asked, a simple letter to your DP with your name, demat number and a request to close is enough. Make sure the account has zero holdings first. Transfer or sell any shares before requesting closure, or the request will not go through.

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Home/Paisa Guide/Demat Account 2026: Open Online, Charges & Best Brokers

💰 DEMAT ACCOUNTUpdated May 2026

Demat Account 2026: Open Online, Charges & Best Brokers

Q: Is a demat account free?

Opening is free at most discount brokers, and yearly AMC ranges from ₹0 (Groww, Angel One) to about ₹300. Under BSDA, holdings up to ₹4 lakh pay nil AMC. You mainly pay only when you trade or sell.

Everything about opening and using a demat account in India - online process, charges breakdown, broker comparison, BSDA accounts for small investors, and answers to 25+ common questions.

Ash K.
Updated May 2026

Opening Fee

₹0 (Most Brokers)

🧮 Calculators ⚖️ Compare Options

AMC

₹0-300/Year

Setup Time

15 Minutes

Documents

PAN + Aadhaar

📖💡 What is a demat account?

A demat account holds your shares and other investments in electronic form, the way a bank account holds your money. Demat is short for dematerialised, meaning paper certificates turned into digital records.

Before demat accounts, shares were physical paper that could tear, get lost, or be forged. Now they sit safely as electronic entries against your name.

When you buy a share, it lands in your demat account. When you sell, it leaves from there.

You never handle paper at all. The whole process is digital from start to finish.

It is the foundation of stock investing in India. Without one, you cannot buy or hold listed shares.

🔒 Your shares are not held by the broker

💡🔒 Your shares are not held by the broker

A demat account holds your securities, not your money. Cash stays in your bank until you buy.

This is why your shares are safe even if your broker shuts down, they sit at NSDL or CDSL, not with the broker.

💰📊 Demat charges at a glance

₹0 (most brokers)

Account opening

₹0-₹300

AMC per year

₹0 at discount brokers

Delivery brokerage

₹13.5-₹20

DP charge per sell

🔀⚖️ Demat vs trading vs bank account

These three accounts work together but do different jobs. Mixing them up is the most common beginner confusion.

Your bank account holds money. Your trading account is the place where you place buy and sell orders.

Your demat account holds the shares themselves after a purchase. Money moves from bank to trading to buy, and shares land in demat.

Most brokers open the trading and demat account together. So in practice you deal with one login, even though three accounts are involved.

🔄🏦 How a trade flows through your accounts

Place order (trading account)

You tap buy or sell in your broker app, which routes the order to the NSE or BSE.

Money moves (bank account)

Funds move from your linked bank account to the exchange for a buy, or proceeds come back on a sell.

Shares settle (demat account)

Shares are credited to your demat on T+1, one business day after the trade. They stay there until you sell.

📋🗂️ Types of Demat Accounts in India

Type	Who Can Open	Key Features
Regular Demat	Resident Indians	Standard account for residents. Hold any securities. Most common type.
Repatriable Demat (NRI)	NRIs with NRE bank account	Allows transfer of funds abroad. Linked to NRE account. Requires FEMA compliance.
Non-Repatriable Demat (NRI)	NRIs with NRO bank account	Cannot transfer funds abroad. Linked to NRO account. Lower compliance burden.
Basic Services Demat (BSDA)	Small investors (holdings up to ₹10 lakh)	Nil AMC up to ₹4 lakh, ₹100/year for ₹4-10 lakh. From 31 March 2026, opened by default unless you opt out.
HUF Demat	Hindu Undivided Family	Held in name of HUF karta. Separate PAN required. Used for tax planning.
Corporate Demat	Companies, partnerships	Higher documentation. Used by businesses for treasury investments.

🏛️⚖️ NSDL vs CDSL: which depository?

India has two depositories that actually store your shares: NSDL and CDSL. Your broker is linked to one of them.

For you as an investor, the choice barely matters. Both are safe, SEBI-regulated, and hold shares identically.

The difference shows only in your demat number format. NSDL numbers start differently from CDSL ones, but the experience is the same.

You do not pick the depository yourself. Your broker decides, and either one is perfectly fine.

💰💡 Demat account charges explained

A demat account is rarely truly free, even when opening costs nothing. A few small charges are worth knowing upfront.

Opening is usually free with most discount brokers now. The annual maintenance charge, or AMC, ranges from zero to a few hundred rupees a year.

The one that surprises people is the DP charge. It is a small flat fee the depository takes each time you sell shares, regardless of the amount.

Brokerage is separate and depends on your broker. Discount brokers charge little or nothing on delivery trades, while full-service ones charge more.

💰 Watch the DP charge

💡💰 Watch the DP charge

DP charges of ₹13.5-20 apply per sell transaction, not per share.

Selling 5 different stocks triggers 5 separate charges, which adds up fast for frequent traders.

⚖️⚖️ Top 10 Demat Brokers Compared - 2026

Broker	Opening	AMC/Year	Delivery	Intraday/F&O	Best For
Zerodha	₹0	₹300	₹0 (Free)	₹20/order	Largest broker, active traders, best charting
Groww	₹0	₹0	₹20/order	₹20/order	Absolute beginners, mutual funds + stocks
Angel One	₹0	₹0	₹0 (Free)	₹20/order	Free delivery + research reports
Upstox	₹0	₹300	₹20/order	₹20/order	Fast execution, Ratan Tata-backed
5Paisa	₹0	₹300	₹20/order	₹20/order	Low-cost, IIFL-backed, mobile-first
Dhan	₹0	₹0	₹0 (Free)	₹20/order	Active traders, advanced features
Paytm Money	₹0	₹0	₹0 (Free)	₹20/order	Paytm users, integrated experience
ICICI Direct	₹0	₹700	0.29%	0.029%	ICICI Bank customers, 3-in-1 account
HDFC Securities	₹999	₹750	0.32%	0.032%	HDFC customers, research reports
Kotak Securities	₹0	₹600	0.25%	0.025%	Kotak customers, full-service broker

Zerodha official equity charges 2026: zero brokerage on delivery, Rs 20 per order intraday and F&O, STT, transaction, GST, SEBI and stamp charges — Zerodha's official equity charges, zero brokerage on delivery, ₹20 per order on intraday and F&O. Source: zerodha.com/charges, June 2026

🏆 Which broker to pick

💡🏆 Which broker to pick

For absolute beginners: Groww or Angel One, simplest interface and zero AMC.

For active traders: Zerodha, best execution and charting. For a bank-linked 3-in-1 account: ICICI Direct if you already bank there.

🎁💰 BSDA: the low-cost account for small investors

The Basic Services Demat Account, or BSDA, is a SEBI scheme for small investors. SEBI raised the limits in September 2024, so far more people now qualify.

There is nil AMC if your holdings stay up to ₹4 lakh. For holdings between ₹4 lakh and ₹10 lakh, the AMC is capped at ₹100 a year plus GST.

Above ₹10 lakh, the account moves to a regular demat with standard charges. You can have only one BSDA, and you must be its sole or first holder.

Many accounts are now auto-converted to BSDA if they qualify. If your portfolio is small, this quietly saves you the regular maintenance fee.

📊💰 BSDA AMC slabs (2026)

Holdings value	Annual maintenance charge
Up to ₹4 lakh	Nil (free)
₹4 lakh to ₹10 lakh	₹100 per year (max)
Above ₹10 lakh	Converts to regular demat, standard AMC

📄🚀 Documents Required to Open a Demat Account

Document	Status	Purpose
PAN Card	Mandatory	Tax identification, KYC
Aadhaar Card (linked to mobile)	Mandatory	Identity verification via OTP, e-KYC
Bank Account Details	Mandatory	For fund transfers, IFSC + account number
Cancelled Cheque or Bank Statement	Mandatory	Bank account verification
Passport-size Photo	Mandatory	Account records
Signature on Plain Paper	Mandatory	Digital signature upload
Selfie with PAN	Mandatory	Live verification (video KYC)
Income Proof (salary slip/ITR)	Mandatory for F&O	Required only for derivatives trading
Address Proof (if Aadhaar address differs)	Conditional	Only if current address differs from Aadhaar

🚀🚀 How to Open a Demat Account Online - Step by Step

Choose a broker and download the app

For beginners: Groww or Angel One (simplest interface, great for learning). For active traders: Zerodha or Upstox (best charting tools). For bank-integrated experience: ICICI Direct or HDFC Securities. Compare account opening fees, AMC, and brokerage before deciding.

Start online application with PAN and mobile

Enter your PAN number, full name, and mobile number. You'll receive OTPs for verification on both. Ensure PAN is not linked to an existing demat account with the same broker - you cannot open duplicate accounts with one broker.

Complete e-KYC with Aadhaar

Enter your 12-digit Aadhaar number and verify with OTP sent to your Aadhaar-linked mobile. Your name, date of birth, and address are auto-fetched from UIDAI database. If Aadhaar is not linked to mobile, you must visit a branch for physical KYC.

Take selfie and digital signature

Use your phone's camera for a clear selfie (good lighting, straight face, no glasses recommended). For digital signature, sign on plain white paper with black pen, photograph it, and upload. Some brokers require a short video recording for in-person verification (IPV) as per SEBI rules.

Link bank account details

Provide your savings account number and IFSC code. Some brokers verify with a ₹1 test transaction from your account. Ensure the bank account is in your name only - joint accounts with spouse may cause issues unless you're the primary holder.

Choose trading segments and complete

Select what you want to trade: Equity Cash (stocks), F&O (derivatives - requires income proof), Commodity, Currency. For beginners, start with Equity Cash only. Confirm all details and e-sign with Aadhaar OTP to submit.

Receive credentials in 24-48 hours

Demat account number (starts with IN for NSDL or 16-digit for CDSL) + trading login ID + DP ID delivered via email and SMS. Most discount brokers activate accounts within 4-6 hours. Bank brokers may take 2-3 days.

Add money and start trading

Transfer funds from linked bank account to trading account via NEFT/UPI/IMPS. Search for a stock (e.g., RELIANCE), enter quantity, check order details (market vs limit, delivery vs intraday), and execute. Shares appear in your demat account on T+1 (one business day).

📅 T+1 settlement: when shares reach you

💡📅 T+1 settlement: when shares reach you

India uses T+1 settlement. If you buy today (T), shares are credited to your demat the next business day (T+1).

For a sale, the money reaches your account on T+1 too. This is among the fastest settlement cycles in the world.

🧾🧾 Taxes on your stock market gains

Profits from shares are taxed based on how long you held them. The line is one year for listed shares.

Sell within a year and the gain is short-term, taxed at a flat rate. Hold beyond a year and it is long-term, taxed at a lower rate with an annual exemption.

Dividends are taxed in your hands at your slab rate. The company no longer pays dividend distribution tax on your behalf.

Keep your contract notes and statements. At filing time, your gains and the tax already deducted both need to be reported.

📊💼 Do you need a demat account for mutual funds?

For most mutual funds, you do not need a demat account at all. You can buy them directly from the fund house or through apps in regular folio form.

A demat account is optional for mutual funds, not required. Many investors hold funds without ever opening one.

The exception is ETFs, which are exchange-traded and do need a demat account. So if you want ETFs, the demat account becomes necessary.

For a plain SIP in a mutual fund scheme, skip the demat requirement. It only matters once you move into shares or ETFs.

🔒🔒 Is your money safe if the broker shuts down?

This worry stops many beginners, but the structure is reassuring. Your shares do not actually sit with the broker.

They are held by the depository, NSDL or CDSL, against your name. The broker is only a middleman who connects you to them.

So if a broker shuts down, your shares remain safe at the depository. You can transfer them to another broker and carry on.

Money in the trading account is different, so do not leave large idle cash with a broker. Keep spare funds in your bank, and move them only when investing.

💰 Is a demat account free?

💡💰 Is a demat account free?

Opening is free at most discount brokers, and AMC can be ₹0 (Groww, Angel One) or up to about ₹300.

Small investors pay nil AMC under BSDA up to ₹4 lakh. You only pay when you actually trade or sell.

⚠️🚀 Common Problems & How to Solve Them

Problem	Solution
Shares not credited after purchase	Wait for T+1 settlement day. If still missing, raise ticket with broker. Shares legally must be credited by T+2.
Negative balance showing in demat	Usually a DP charges pending. Pay outstanding amount via trading account. Contact broker if amount looks incorrect.
Can't sell inherited shares	Complete transmission from deceased holder. Required: death certificate, succession certificate/will, KYC documents. Process takes 4-6 weeks.
Demat account frozen by broker	Usually due to unpaid AMC or inactive account (no activity for 12 months). Pay dues, complete re-KYC, submit reactivation form.
Wrong shares in my demat	Rare but possible during corporate actions (bonus, split). Raise complaint with broker immediately. SEBI SCORES platform escalates if unresolved in 30 days.
Transfer demat to another broker	Submit DIS (Delivery Instruction Slip) to current broker requesting transfer to new DP. Takes 7-14 days. Some brokers charge ₹25-50 per transfer.
Close demat account	Submit account closure form to broker. Shares must be sold or transferred first. AMC is prorated. Broker must close within 7 working days.

💤🏦 Dormant Demat Account: What It Means

If you do not use your demat account for a long stretch, it can be marked dormant or inactive. This is common and easy to fix.

A dormant account is simply one with no activity for an extended period. Your shares stay safe; the account is just frozen for new transactions.

To reactivate it, contact your broker and complete a fresh KYC or reactivation form. They may ask for updated documents.

It is worth logging in occasionally even if you are not trading. A quick check keeps the account active and your details current.

🔢🚀 How to Find Your Demat Account Number

Your demat account number is on every statement your broker sends. It is also visible inside your broker app under account details.

If you have lost track of it, the easiest route is the Consolidated Account Statement. NSDL and CDSL both let you pull this using your PAN.

The number looks different depending on the depository. A CDSL number is a 16-digit figure, while an NSDL one is split into a DP ID and a client ID.

You can also call your broker's support with your PAN and registered details. They will read out or email your demat number after verification.

👪👤 Add a nominee, it is now required

SEBI requires demat account holders to either add a nominee or formally opt out. Skipping it can get the account frozen for transactions.

Adding a nominee is free and takes a few minutes online. It ensures your shares pass smoothly to the right person without legal hassle.

📚📚 Official Sources & Further Reading

Resource	What It Covers	Official Link
SEBI - Demat Regulations	All regulatory framework for demat accounts, broker licensing, grievance redressal	sebi.gov.in
NSDL - Investor Services	Check demat account status, download holdings statement, e-CAS (Consolidated Account Statement)	nsdl.co.in
CDSL - Easi/Easiest	Access demat holdings online, transfer shares between DPs, e-voting for company AGMs	cdslindia.com
SEBI SCORES Portal	File complaints against brokers/DPs, track grievance resolution within 30 days	scores.sebi.gov.in
IT Dept - Capital Gains	File ITR, check STCG/LTCG rates, pre-filled ITR forms with broker data	incometax.gov.in
Investor Awareness (SEBI)	Verified educational content, investor protection fund claims, fraud alerts	investor.sebi.gov.in

📖📚 Official Sources & References

Source: SEBI Depositories Act 1996, plus CDSL and NSDL guidelines.

All figures are verified against official notifications. Charges and rules change, so confirm on the official portal before acting.