Open Demat Account Without A PAN Card - A Complete Guide

5paisa Research Team Date: 02 Feb, 2024 03:52 PM IST


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A DEMAT Account, or dematerialized account, is quite similar to a bank account in terms of functionality. It logs all the activities performed by the individual in the stock market and keeps records of the financial instruments in an electronic format. Demat accounts provide several benefits to people willing to trade in shares, bonds, ETFs, and mutual funds.

Demat accounts have greatly speeded up the process of trading and minimized the risks of loss, damage, or theft associated with paper-based trades. The procedure of opening a Demat account is simple, quick, and quite uniform across brokerage firms, banks, and other financial institutions that facilitate online trading.

However, a lot of people wonder whether they can open a Demat account without a PAN card. This guide aims to throw some light on this topic.

Opening An Online Demat Account

To apply for a Demat account, you should produce a few key documents as a part of the protocol and complete your KYC procedure.
An individual must submit below given list of documents to open Demat Account:
•    Identity proof such as driving license, UID, PAN card, voter ID, etc.
•    Address proof like ration card, Aadhaar card, passport, or voter ID.
•    Income proof in the form of an income tax return is essential for those who want to trade in derivatives like Options and Futures.
•    Bank account proof with a canceled cheque.
•    PAN card.
•    Passport-size photographs.
Once these documents are submitted, they are verified before processing your request and opening your account.

Is PAN Card A Must For A Demat Account?

A PAN card is one of the essential documents while applying for a Demat account, especially following the recent change in rule. You can't open a Demat account without a PAN card.

The Securities and Exchange Board of India (SEBI) has made PAN cards mandatory through its circular dated April 27, 2007. According to this circular, it is essential to submit a PAN card at the time of opening a Demat account, regardless of the objective or size of the investment.

The applicant should show his original PAN card when opening a Demat account. He must also submit a self-attested copy of the PAN card with other documents.

If there are multiple holders for a Demat account, all the joint account holders should submit their PAN. A person can open multiple Demat accounts without any limit. However, all the accounts belonging to an individual are linked to one PAN card.

Can I Open Demat Account Without PAN Card?

PAN (Permanent Account Number) is a critical document that every Indian citizen should possess. Your PAN number consolidates all your financial transactions in one place.

The Income Tax department identifies PAN as the sole identification of all your transactions in the securities market, regardless of the amounts. The law allows a person to hold only one PAN card. Once generated, your PAN number does not change throughout your lifetime, even when you move to other cities or countries.

A PAN card is a critical requirement for applying for a Demat account. For all those who are looking for alternatives to open a Demat account without submitting the PAN number, it is important to note that you must submit your PAN card unless you are exempted from obtaining it due to some circumstances, in which case you are allowed to open a ‘limited purpose beneficiary owner account.’ This account allows you to sell any physical securities you already possess.

People belonging to the scheduled tribes of North Eastern regions like Arunachal Pradesh, Manipur, Mizoram, Tripura, and Nagaland and some places of North Cachar Hills in Assam are allowed to open Demat accounts without PAN card if they plan to invest less than Rs. 50,000 in securities.
Other than these, entities that fall under section 12 of the 1992 act of the SEBI are exempted from submitting PAN cards for opening Demat accounts. These accounts stay active for a month, after which they are frozen if a PAN card is not produced.

UN agencies and other bodies exempted from tax payments in the country need not produce a PAN card when opening a Demat account for verification. The same exception applies to those living in the state of Sikkim, provided they produce their proof of residence. In all other circumstances, it is not possible to get a Demat account without a PAN card.

Thus, a PAN card is a requirement for opening a Demat account for Indian citizens and NRIs. You can open a Demat account without a PAN card if you fall under any of the exceptions to this rule. PAN is a crucial document in India and a prerequisite for those willing to enter the space of trading in securities and other financial instruments.

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