January 18, 2024

How To Use a Demat Account

How To Use a Demat Account?

To operate a Demat account online in India, open an account with a DP, receive a unique client ID, access and manage holdings via a web or app interface, buy and sell securities through your linked trading account, and monitor for corporate actions and discrepancies. Remember annual fees.


What Is a Demat Account?

A Demat account is like a digital bank account for your investments in stocks, bonds, and other securities. It replaces paper certificates with electronic storage, making buying and selling shares faster and more secure, and simplifies managing your investment portfolio.

How To Operate Demat Account Online?

Operating an online Demat account in India involves opening an account with a Depository Participant, getting a client ID, managing investments through a web or app platform, executing trades via a connected trading account, keeping track of corporate events and irregularities, and being mindful of yearly fees.

Open an Account: Choose a Depository Participant (DP) registered with either NSDL or CDSL. Submit necessary documents like PAN card, address proof, and bank details.

Get Unique ID: Upon opening the account, you’ll receive a unique client ID, which is used for all transactions.

Access your Trading Account: You can access your trading account with the unique client ID. Once you open a demat account, trading account will be opened automatically.

E-Access: Access your Demat account online through the web or app to monitor and manage your holdings.

Buy Securities: When you buy stocks, the securities will be electronically transferred and stored in your Demat account.

Selling Securities: To sell stocks, you can simply login to your trading account and hit the sell button on the stocks you want to sell.

Corporate Actions: Any dividends, stock splits, or other corporate actions related to your holdings will automatically get updated in your Demat account.

Regular Monitoring: Regularly check your account for any discrepancies and to track your investments’ performance.

Annual Maintenance Fee: Be aware of any annual fees or charges associated with maintaining the Demat account.

How To Open Demat Account?

To open a Demat account, visit a broker’s website, fill in personal details, PAN, and address. Choose trading products, link a bank account, provide personal and financial information, upload required documents, select a Demat profile and brokerage plan, complete IPV and e-sign with Aadhaar.

  1. First, visit a broker’s website and click on Open an Account.
  2. Fill in your Name, Email, Mobile Number, and State and click on Open an Account.
  3. Fill in your PAN Card details and Date of Birth. (DOB should be as per PAN Card)
  4. Select the products you want to trade-in.
  5. Enter your permanent address details. 
  6. Link your bank account to the trading account.
  7. Enter your personal and financial details.
  8. Upload account opening documents. 
  9. Select the Demat Profile and Brokerage Plan.
  10. Provide an IPV (In-person verification) by showing your PAN towards the camera along with your face.
  11. E-sign the documents by verifying your Aadhaar with your Mobile Number.
  12. Your account will be activated within 24 hours.
  13. You can check the Account Activation Status here.

How To Operate Demat Account Online? – Quick Summary

  • A Demat account is like an online storage place for your stocks, etfs, and bonds. It replaces paper documents, making it easier and safer to trade and keep track of your investments.
  • To operate a Demat account online in India, open an account, obtain a client ID, use a web/app platform for investment management, execute trades through a linked trading account, monitor corporate events, and be aware of annual fees.
  • To open a Demat account, visit a broker’s website, provide personal details, PAN card, address, link a bank account, upload documents, select a profile and plan, complete IPV, e-sign with Aadhaar, and expect activation within 24 hours.

How To Use A Demat Account? – FAQs  

How can I use my Demat account for the first time?

You can use your demat account for the first time by logging into it via client ID provided by the broker.

What can I do with my Demat account?

With your Demat account, you can buy, sell, and hold various financial instruments like stocks, bonds, mutual funds, and government securities in electronic form, simplifying investment management.

How does a Demat account work?

A Demat account works by digitally storing securities, replacing physical certificates. It allows you to buy, sell, and hold shares electronically, facilitating secure and efficient trading and investment management.

Can we withdraw money from Demat account?

Yes, you can withdraw money from your demat account anytime.

Do I have to pay tax if money is in Demat account?

In India, short-term capital gains (STCG) under section 111A are taxed at 15% plus applicable surcharge and cess, while normal STCG is taxed based on total income. Long-term capital gains (LTCG) tax on equities is 10% if profits exceed Rs. 1 lakh annually, while other assets are taxed at 20% with indexation benefits.

What happens if I never use my Demat account?

If you don’t use your Demat account, it may become dormant or inactive over time. In such cases, you should still monitor it, pay any applicable fees, and consider its future utility.

What are the documents required for Demat account?

To open a Demat account online, you’ll need soft copies of your PAN Card, address proof (like Aadhar or Passport), passport-size photo, income proof (bank statement, ITR, salary slip), and a scanned signature.

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