What are DP charges (Depository Participant charges)?

The share market attracts old and young alike because of the many possibilities it offers. Every day, new participants join the share market to try their investing skills. Unlike other investments, investing in shares requires a wide range of research regularly. At the same time, it is important to know about the charges associated with share trading. Everyone is aware of the brokerage charges, however, there are other charges as well that a stock market investor must pay. In this article, we will explore all DP charges, which are associated with delivery trading.

Depository Participants - DP

The key intermediary that connects the stock market and the investors is a DP or Depository Participant. A DP can also be a stockbroker if it provides Demat & Trading account. E.g., Bajaj Broking is a DP as well as a stockbroker, it facilitates the buying and selling of stocks along with offering a Demat Account.

What are DP Charges?

Any DP levies charges whenever there is sale of shares from your Demat Account. These charges are flat transactional fees or dependent on the transaction value. If for example, your stockbroker sets DP charges as flat INR 10, you’d pay Rs. 10 by selling 100 shares and Rs. 10 on selling 1000 shares. Note that you can’t view these charges in the contract notes.

The DP charges for Bajaj Broking are ₹30 or 0.0002% of transaction value whichever is higher + applicable taxes.

Who levies DP charges?

Depository participant charges are levied by the depositories and the depository participant. These are charges levied on all sell transactions of delivery orders. Depending on the depository with which the broker is associated, DP charges will be collected.

Why are DP Charges levied?

DPs are registered to depositories like the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). The role of NSDL and CDSL is that maintains and secure the record of all your shares in the demat account. In simple terms, it is very similar to cloud storage, on a massive scale. To maintain this huge amount of data, the depositories charge the DPs a membership fee for every demat account that is opened and maintained. They also charge the DPs for other activities associated with the demat account, such as Dematerialization, Rematerialization, Pledging, Unpledging, Off-Market Transfer, etc. To maintain such costs, DPs charge their demat account holders. Thus, the DP charges are levied from the customers.

How much DP charges are levied?

The DP charges levied are different for different participants. The charges levied by Bajaj Broking are mentioned below:

The DP charges for Bajaj Broking are ₹30 or 0.0002% of transaction value whichever is higher + applicable taxes.

Usually, DP charges do not reflect on your contract note.

Type of Charge Charges
Account Opening Charges NIL
Annual Maintenance Charges NIL
Pledge/Unpledge/Closure/Invocation Charges Rs. 35 + applicable taxes
Physical CMR/DIS First CMR/DIS request is free. Post that Rs.50 + Rs 100 Courier charges + applicable taxes
Dematerialisation Request Charges Rs.50 per request + Rs. 50 per certificate
Re-materialisation Request Charges Rs. 35 per certificate or per 100 shares and part there of whichever is higher and Rs. 25 per re-state of statement of account redemption

Can I avoid paying DP charges?

DP charges are collected by all stockbrokers on sell-side transactions. However, this is levied only in the case of delivery trades. While trading in intraday, derivatives (futures and options), and BTST, DP charges are not levied. The reason they are not levied is that there is no delivery of shares involved in it. So, if you do not want to pay DP charges, the only way to avoid it is by trading in other segments like Futures and Options. If you are investing in shares for the long term, then you must pay the DP charges.

Conclusion

DP charge is levied whenever shares are sold from the demat account It’s better you know the meaning of DP charges first and then go ahead with the selling of your shares. In case you wish to invest in the stock market, then you must consider DP charges, as they can influence your profit margin in the end.

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Frequently Asked Questions (FAQs)

It’s an institution that keeps securities (shares, debentures, bonds, and MF) in electronic format on investor’s behalf and provides services that are related to security transactions. NSDL and CDSL are the two central depositories, and every broker is a member of one through which it offers Demat services.

DPs are institutions that provide investors with demat account and the related depository services.

NSDL and CDSL are the depositories that collect charges to facilitate the transaction of securities. DP charges are applied when securities are traded from your Demat account. DP charges apply to depository participants first which they pass on to investors.

For a Bajaj Broking Demat Account, Rs. 30 plus applicable taxes is charged each time an ISIN is debited from the demat account.

You don’t have to pay DP charges for intraday trading. DP charges are applicable only on delivery trading.

DP charges are levied when the scrip is debited from the Demat account. For a Bajaj Broking Demat Account, Rs. 30 plus applicable taxes is charged each time an ISIN is debited from the demat account.

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