Depository Participant (DP) charges, often called DP charges, are fees levied by a depository and depository participant for services like dematerialization and rematerialization of shares. They are payable by the investor when selling stocks from their Demat account.
Contents:
- DP Charges Means
- Dp Charges Example
- How To Calculate DP Charges?
- DP Transaction Charges – Alice Bue
- DP Charges for Intraday Trading
- DP Charges – Quick Summary
- What Is DP Charges – FAQs
DP Charges Means
DP charges are transaction fees that apply when you sell any shares from your Demat account. In essence, the depository participant, which could be a bank, broker, or financial institution that facilitates the holding of shares in dematerialized form, charges a fee for their services. These charges can vary from one depository participant to another.
For example, if you sell 100 shares of a company, the depository participant (like Alice Blue) will levy a specific charge for this transaction. This fee is irrespective of the volume of the transaction, meaning you’ll pay the same amount whether you sell one share or a thousand shares in a single transaction.
Dp Charges Example
To better understand DP charges, let’s consider a scenario. Suppose you have 50 shares of Reliance Industries Ltd. in your Demat account, which Alice Blue maintains. If you decide to sell 20 shares, a DP charge will be levied on this transaction. It’s important to note that DP charges are assessed per scrip, not per share. Hence, whether you sell 1, 10, or 20 shares of Reliance Industries Ltd., you’ll pay the same DP charge for this transaction.
How To Calculate DP Charges?
Calculating DP charges is quite straightforward. Following are the steps to calculate:
1) Identify the DP charge per transaction set by your depository participant. For example, Alice Blue charges ₹15 + GST per transaction.
2) Add the Goods and Services Tax (GST) to the base DP charge. In India, the current GST rate is 18%.
3) The total amount is the DP charge you will incur for that transaction.
For instance, if you sell any number of shares of a particular company in a single transaction with Alice Blue, the DP charges would be ₹15 + 18% of ₹15 (GST), which equals ₹17.70. This amount is charged per scrip, not per share.
DP Transaction Charges – Alice Blue
Alice Blue, a well-known broker in India, has a very transparent policy regarding DP charges. For each sell transaction, Alice Blue charges ₹15 + GST. This fee is quite competitive and includes both Alice Blue and Central Depository Services Limited (CDSL) charges. This fee applies to each scrip sold in a day. Thus, regardless of the number of shares you sell in a single transaction, the DP charge remains the same.
DP Charges for Intraday Trading
Since the shares bought are not transferred to the Demat account in intraday trading, DP charges are not applicable. These charges are only incurred when you sell shares from your Demat account, i.e., in the case of delivery trades.
We hope that you are clear about the topic. But there is more to learn and explore when it comes to the stock market, and hence we bring you the important topics and areas that you should know:
DP Charges – Quick Summary
- DP Charges refer to the fees levied by a depository and depository participant for providing their services.
- DP charges apply per scrip per transaction when you sell shares from your Demat account.
- As an example, irrespective of the number of shares you sell in a single transaction, the DP charge remains constant.
- DP charges can be calculated by adding the base DP charge set by the depository participant and the Goods and Services Tax (GST).
- Alice Blue charges ₹15 + GST per sell transaction, a fee that includes both Alice Blue and CDSL charges.
- DP charges do not apply to intraday trading as shares are not transferred to the Demat account.
What Are DP Charges – FAQs
1. What is DP Charges meaning?
DP charges, short for Depository Participant charges, are fees charged by a Depository and Depository Participant for their services. These charges are applicable when you sell any shares from your Demat account.
2. Are DP charges compulsory?
Yes, Dp charges are compulsory for every sell transaction from your Demat account. The charge applies per scrip and not to the volume of shares sold.
3. Do all brokers charge DP charges?
Yes, all brokers charge DP charges for their services related to maintaining and transacting from your Demat account.
4. Is DP and broker the same?
A Depository Participant (DP) could be a broker, bank, or financial institution facilitating the holding of securities (like shares, bonds, etc.) in dematerialized form. So, a broker can be a DP, but a DP is not necessarily a broker.
5. How is DP charges calculated?
DP charges are calculated by adding the base DP charge set by your depository participant and the Goods and Services Tax (GST). For instance, if the DP charges are ₹15, with the GST rate at 18%, the total DP charges would be ₹15 + 18% of ₹15.
6. Can I avoid DP charges?
No, DP charges cannot be avoided as they are mandatory fees charged by the depository participant for every sell transaction from your Demat account.
7. Why are DP charges high?
The DP charges might seem high due to various factors like the operating costs of the depository participant, the kind of services they provide, and the transaction volume.
8. What is maximum DP charges?
The maximum DP charges can vary from one depository participant to another. It’s advisable to check with your broker about their specific DP charges.
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