Nifty 17196.7 (-1.18%)
Sensex 57696.46 (-1.31%)
Nifty Bank 36197.15 (-0.85%)
Nifty IT 35848.05 (-0.86%)
Nifty Financial Services 17779.5 (-1.13%)
Adani Ports 737.45 (-0.22%)
Asian Paints 3110.45 (-2.21%)
Axis Bank 673.00 (-0.46%)
B P C L 385.90 (1.86%)
Bajaj Auto 3287.85 (-1.22%)
Bajaj Finance 7069.25 (-1.55%)
Bajaj Finserv 17488.70 (-1.52%)
Bharti Airtel 718.35 (-1.94%)
Britannia Inds. 3553.75 (-0.69%)
Cipla 912.05 (-1.00%)
Coal India 159.75 (0.28%)
Divis Lab. 4757.05 (-0.42%)
Dr Reddys Labs 4596.50 (-1.42%)
Eicher Motors 2455.55 (0.16%)
Grasim Inds 1703.90 (-1.16%)
H D F C 2771.65 (-1.29%)
HCL Technologies 1171.40 (-1.12%)
HDFC Bank 1513.55 (-0.80%)
HDFC Life Insur. 690.95 (-2.03%)
Hero Motocorp 2462.45 (-0.41%)
Hind. Unilever 2343.65 (-1.66%)
Hindalco Inds. 424.65 (-1.72%)
I O C L 122.20 (1.28%)
ICICI Bank 716.30 (-0.84%)
IndusInd Bank 951.15 (0.59%)
Infosys 1735.55 (-0.73%)
ITC 221.65 (-1.69%)
JSW Steel 644.55 (-0.34%)
Kotak Mah. Bank 1914.20 (-2.55%)
Larsen & Toubro 1801.25 (0.67%)
M & M 836.95 (-1.48%)
Maruti Suzuki 7208.70 (-1.59%)
Nestle India 19321.35 (-0.93%)
NTPC 127.00 (-1.32%)
O N G C 145.90 (1.32%)
Power Grid Corpn 206.10 (-3.92%)
Reliance Industr 2408.25 (-3.00%)
SBI Life Insuran 1165.95 (-1.86%)
Shree Cement 25914.05 (-1.43%)
St Bk of India 473.15 (-0.81%)
Sun Pharma.Inds. 751.80 (-1.89%)
Tata Consumer 774.30 (0.14%)
Tata Motors 480.10 (0.21%)
Tata Steel 1118.00 (0.50%)
TCS 3640.45 (-0.07%)
Tech Mahindra 1593.30 (-2.23%)
Titan Company 2369.25 (-0.72%)
UltraTech Cem. 7332.45 (0.13%)
UPL 712.75 (2.08%)
Wipro 640.75 (-0.94%)

Understanding the advantages of a benefits demat account

To purchase, hold and sell shares, you need a Demat account. It is a digitally functioning account used to hold dematerialised securities, including stocks, mutual funds, bonds, exchange-traded funds (ETF’s), etc. It reduces the hassles related to paperwork and provides safety to your sensitive data as well. Moreover, when your assets are dematerialised, you can gain higher security against the risk of forgeries.

Along with the easy virtual trading of shares, a Demat Account has other benefits as well.

The following section enumerates the advantages of having a Demat Account.

1. Reduced Risk of Loss of Documents - The chances of losing documents are high in physical bonds and shares. The shares can even get misplaced if you face any natural disaster that compels you to shift. Hence, storing shares in an online format is a far better and safe option as it enables you to have a permanent digital record of your share.

2. Avoiding Forgery - In the case of physical shares or bonds, the risk of fraud is high. But when it comes to operating a paperless Demat account, you have all the necessary details and authentic data in your record, thereby avoiding forgery or impersonation.

3. Loan Facility - Apart from using it as a security deposit for your savings, you can access various bank loans through the securities maintained in the Demat account that you have opened. The securities can be guaranteed as collateral for getting a loan from your bank.

4. Cost-Effective - One of the evident benefits of online transactions is cost reduction. Similarly, if you choose to open a Demat account online, it can ease you off the expenses like stamp duty and other handling charges necessary for physical bonds. The only charge that is payable in a Demat account is for brokerage. However, if you opt for discount brokers, you shall be able to save more.

5. Time Saver - The time taken for buying and selling shares using a Demat account is minimal. Hence, the liquidity of shares is easier in this case. On the other hand, transferring physical shares was a lengthy process. Online transactions are processed in a jiffy because the securities are stored in a dematerialised form.

6. Easy Tracking- Another benefit that you can avail yourself of while you open Demat account is that the number of physical documents is nil. It invariably reduces efforts to keep track of each of them. Therefore, you do not need to maintain a record manually. All your documents are safely held along with the record of each investment.

7. No TDS on Demat Securities - One of the issues taxpayers face is TDS or Tax Deduction at Source. Nonetheless, the CBDT- Central Board of Direct Taxes has granted dispensation from TDS when a Demat account holder makes payments from his account. Additionally, no TDS is deducted from the interest that you receive on your bonds and securities. For exemption from TDS, make sure you save your securities in the Demat mode, and they are listed on NSE and BSE.

8. Global Investment - Globalisation is significantly encouraged with the proliferation of Demat accounts. Foreign investors are given easy access to the Indian stock market through these accounts, thereby benefitting the economy of India.

Types of Demat Accounts

There are three types of Demat Accounts:

  1. Regular Account- This account is basically for traders residing in India.
  2. Repatriable Account- Non-Resident Indians use this account, and it plays an active role in transferring funds abroad. The Repatriable account needs to be linked with the NRE bank account.
  3. Non-Repatriable Account- This is a variant of Repatriable Account, and Non-Resident Indians also use it. However, funds cannot be transferred abroad through this account, and it needs an associated NRO bank account to function effectively.

Also Read: How to Use a Demat Account?

Credentials Mandatory for a Demat Account

At the time of Demat Account opening, you need to provide some details for security purposes. The list below contain the documents required for Demat account creation:

  1. Identity Proof (E.g., Passport, Aadhaar, Voter ID Card, PAN, Driving License)
  2. Address Proof (E.g., Passport, Voter ID Card, Ration Card, Insurance Copy, Utility Bills)
  3. Proof of Income (E.g., Copy of Income Tax Return Acknowledgement, Salary Slip, Current bank account statement for the past 6 months, Statement of Demat Account holding)
  4. Proof of Bank Account (E.g., Cancelled Cheque, Photocopy of Passbook)
  5. Permanent Account Number (PAN) card
  6. Recent passport size photographs

About 5paisa
5paisa is one of India’s fastest growing Discount Stock Brokers and the first Publicly Listed online brokerage company. We rank among the top 10 discount broking firms in the country. We are backed by one of India’s leading diversified financial services concern IIFL. 5paisa has a daily turnover of over Rs. 30,000 Cr. Alongside, we provide our services to over 450,000 clients. Our app is used by more than 3.5 million customers all over the country.
We provide the best Demat account so that our customers enjoy a smooth trading experience. 5paisa is the one-stop destination for financial services, including Mutual funds’ investments, Equity Trading, Insurance, Research Products, Digital Gold Investment, Commodity and Currency Trading, Robo Advisory, Personal Loans, etc.