What are DP Charges in Demat Accounts & How To Calculate DP Charges?

DP Charges or Depository Participant Charges are charges levied by depositories when you sell or transfer shares from your demat account. They are not a part of the brokerage fees but are a compulsory transaction cost. DP charges are calculated per transaction and depend upon the depository (CDSL/NSDL) and the DP.

What are DP Charges? 

DP charges (Depository Participant charges) are fees collected by the depository participant when you sell shares from your demat account. These charges are levied per transaction, not per share and are set by the DP (such as a broker) in coordination with the depositories like NSDL or CDSL. DP charges are separate from brokerage, GST and other trading costs and are typically applied only on the sell side of equity delivery trades.

How To Calculate DP Charges?

Understanding how to calculate DP charges is crucial for investors to perfectly manage their costs. DP charges are a combination of:

• Depository charges (charged by NSDL/CDSL)
• DP-specific charges (set by brokers)
• GST (18% on DP charges)

For example, if CDSL levies ₹3.50 and your broker charges ₹20 for a certain sell, the total DP charges in Demat account would be:

This fee is applicable per transaction, not per share, making bulk selling cost-effective.

Some brokers may also charge a percentage-based fee, such as 0.02% of the transaction value. For example if you sell shares worth ₹1,00,000, the DP charges would be ₹20 (0.02% of ₹1,00,000).

Components of DP Charges

The key components of DP charges in the share market include:

1. Depository Fees: Charged by CDSL (₹3.50 per transaction) and NSDL (₹5 per transaction).
2. Broker DP Fees: Varies by broker.
3. GST (18%): Applied to total DP charges.
4. DP Transaction Charges: A brokerage-specific component that varies.
5. Account Maintenance Fees: Charged annually or quarterly by brokers for the upkeep of your account.
6. Other Charges: Brokers may charge separate fees for statement generation, rematerialisation of shares, etc.

Some brokers include DP transaction charges in their overall pricing, while others list them separately. Investors often compare DP charges of all brokers to reduce expenses.

Additionally, demat account charges in India may include account maintenance fees, adding to trading costs. Selecting brokers with low DP charges is advisable for frequent traders. Understanding the components of DP charges helps investors budget their expenses and avoid surprises.

How do DP Charges Work?

When you sell shares from your Demat account, your Depository Participant (DP) charges a fee for processing the debit (removal) of shares from your account.

• These charges are per ISIN (International Securities Identification Number), not per share.
• Both NSDL and CDSL set the basic structure, but the actual amount depends on your broker.
• Even if you sell only one share, you’ll still pay the full DP charge for that ISIN.
• DP charges are deducted directly from your trading account on the day of the transaction

Consider a scenario where you sell 100 shares of a company and your broker’s DP charges are ₹15.50 per transaction. In this case:

• CDSL charge: ₹3.50
• DP charge: ₹15.50
• GST (18%): ₹3.42
• Total DP Charges: ₹22.42

These charges are applied per sell transaction, irrespective of quantity. If the investor sells 50 shares separately, they would incur two separate DP charges, increasing costs.

Alternatively, suppose your broker charges a percentage of the transaction, let’s say 0.04%. The 100 shares that you sell are valued at ₹300 each. This means a total value of ₹30,000. In this case:

• NSDL charge: ₹5
• DP charge: 0.04% of ₹30,000 = ₹12
• GST (18%): ₹3.06
• Total DP Charges: ₹20.06

Comparing DP charges in stock market brokers helps traders optimise expenses. Investors looking for brokers with low DP charges should review the fee structure before opening a Demat account.

Who Levies DP Charges?

Who Levies DP Charges?
DP charges are levied by the Depository Participant (DP) the stock broker, bank or financial institution through which you hold your Demat account.

• The DP collects these charges from you whenever you sell shares from your Demat account.
• These charges are not decided by the stock exchange but are set by the depository (NSDL or CDSL) and the DP’s own fee structure.
• The DP then passes a portion of the fee to the respective depository (NSDL or CDSL) for maintaining your securities in electronic form.

Reasons for Levying DP Charges

DP charges are levied to help DPs recover expenses. These can help them cover the costs of maintaining and processing securities in a demat account. Here are the costs they cover:

1. Depository Maintenance: Supports the operations at CDSL/NSDL.
2. Transaction Processing: Ensures smooth transfer of securities.
3. Regulatory Compliance: Covers legal and regulatory costs.
4. Broker Profitability: Helps brokers run their operations smoothly.
5. Technology Infrastructure: Helps with the upkeep of the technology used for transactions.
6. Operational Costs: Ensures smooth handling of customer queries, client relations, and other support functions.

Since DP charges are not included in brokerage fees, investors should be aware of how DP charges in the stock market work. These charges ensure the safety of shares held in Demat accounts and the smooth execution of transactions.

Understanding the reasons for levying DP charges helps investors appreciate the value of these services and plan their investments accordingly.

Types Depository Participant Charges

1. Account Opening Charges: One-time fee for opening a Demat account.
2. Annual Maintenance Charges (AMC): Yearly fee for maintaining the Demat account.
3. Transaction Charges: Fee for buying or selling securities, usually per transaction.
4. Pledge Charges: Charges for pledging shares as collateral for a loan.
5. Dematerialisation Charges: Fee for converting physical share certificates into electronic form.
6. Rematerialisation Charges: Fee for converting electronic holdings back into physical certificates.
7. Off-Market Transaction Charges: Charges for transferring securities between Demat accounts outside the stock exchange.
8. Custodian Charges: Charges for holding securities in the Demat account (mostly for institutional investors).

Conclusion

DP charges are an essential aspect of investing in the stock market. Once you understand what are DP charges, it helps you manage costs efficiently and make informed investment decisions. Since these charges apply only to sell transactions, they impact trading profitability. Choosing brokers with low DP charges can reduce expenses. Comparing DP charges of all brokers ensures cost optimisation. Leveraging a good Demat Account App lets you monitor these charges in real-time, ensuring better control over your investments.