What Are DP Charges

Investing in the stock market involves several charges that are often overlooked, especially by beginners. Among these, DP charges (Depository Participant charges) are usually the least clear charges. If you’ve ever spotted a small deduction in your account after selling shares, chances are those were DP transaction charges.

This article will walk you through what DP charges mean, how they are calculated, who levies them, and most importantly, how to avoid DP charges where possible. Let’s break it down.

What Exactly Are DP Charges?

DP charges full form - Depository Participant charges are fees imposed by depository participants, such as stockbrokers or banks, that serve as intermediaries between investors and central depositories like CDSL and NSDL. These charges are applied when securities are debited from your Demat account. These charges are not levied by the stock exchange (like brokerage or transaction charges) but by the Depository Participant (DP) - the entity that holds your securities in electronic form.

To understand them in depth, let’s first break down the entities involved:

So, when you sell a stock:

• Your DP debits the shares from your Demat account.
• The depository, either NSDL or CDSL, processes and validates the share transfer.
• As part of this process, DP charges (Depository Participant charges) are applied.

DP Charges Meaning: These are fees collected by your broker on behalf of the depository and DP for transferring shares out of your Demat account during a delivery sale.

How Are DP Charges Calculated?

Understanding how to calculate DP charges helps investors plan better, avoid unexpected deductions, and make smarter trading decisions. While the charges may seem small, they can affect your overall returns, especially if you're an active trader making multiple delivery-based sell transactions.

So, let’s simplify the formula.

DP Charges = (Depository Fee + Broker’s DP Fee) + GST @ 18%

Here's how each component adds up:

Example 1: Fixed Charges (Most Common Method)

Let’s say your broker uses NSDL, and the fee structure is:

NSDL fee = ₹5 per transaction

Broker’s DP charge = ₹20.00

Then, total DP charges will be:

Note: This charge is applied per transaction (per ISIN), not per share, which means selling in larger quantities at once can be more cost-efficient.

Example 2: Percentage-Based DP Charges (Less Common)

Some brokers may apply a percentage-based DP charge (usually 0.01% - 0.03% of the trade value), especially on older account types or premium accounts.

Scenario: You sell shares worth ₹1,00,000, and the broker charges 0.02% of the transaction value.

0.02% of ₹1,00,000 = ₹20

Assume no additional flat fee.

GST (18%) on ₹20 = ₹3.60

Total DP charges = ₹23.60

What Makes Up Depository Participant Charges in the Share Market?

For investors who frequently deal with delivery-based trading, understanding the structure of DP (Depository Participant) charges is key to managing costs effectively. DP charges involve more than a simple transaction fee. Here’s how they’re structured:

1. Depository Charges:

These are base fees charged by the two main depositories in India - CDSL and NSDL- to facilitate the electronic transfer of securities when you sell shares.

CDSL(Central Depository Services India Limited): ₹5.50

NSDL (National Securities Depository Limited): ₹5.00

These are flat fees and remain consistent across brokers connected to the respective depository.

2. Broker-Specific DP Charges:

In addition to depository charges, your broker adds their own service fee for processing the debit of shares from your Demat account. This varies from broker to broker and is charged in one of two ways:

• Flat fee per transaction (usually ₹10–₹25)
• Percentage-based fee (e.g., 0.01%–0.04% of the total sell value)

3. GST (Goods and Services Tax):

An 18% GST is applicable on the combined amount of depository and broker DP fees. This tax is mandatory and is added automatically to your DP charges.

4. Demat Account Maintenance Fees (AMC):

Apart from transaction-based fees, brokers usually charge a maintenance fee to keep your Demat account active. These are billed:

• Annually or quarterly
• And can range anywhere from ₹300 to ₹1,000, depending on the broker.

This fee typically covers backend services like record-keeping, safekeeping of shares, and periodic reporting.

5. Other Miscellaneous Charges:

Some brokers may include additional service-related fees, such as:

• Physical or digital statement generation
• Rematerialisation costs (incurred when switching from demat to physical shareholding)
• Pledge/unpledged charges for loan or margin-related requirements

These aren’t charged often, but can come up depending on your account activity.

Key Insights to Remember

• DP charges = Depository fee + Broker’s DP fee + 18% GST
• These charges apply per ISIN, not per share, making bulk selling more cost-efficient
• AMC and service fees add to the total cost of holding a Demat account
• Comparing brokers for the lowest DP charges can help active traders save significantly over time

Being aware of these individual components gives investors a clear picture of their transaction costs and helps in making well-informed trading decisions. Whether you're just starting out or actively investing, tracking these charges helps you stay efficient and cost-aware.

How Do Depository Participant Charges Apply? – A Practical Illustration

Let’s assume you're using a CDSL-affiliated broker and decide to sell 100 shares of Infosys.

• CDSL fee = ₹5.50
• Broker’s handling fee = ₹20
• GST = 18% on ₹25.50 = ₹4.59
• Total DP charge = ₹30.09

This fee will be debited from your ledger even if the shares were sold for a small amount, showing how DP charges impact returns in low-value trades.

Who Is Responsible for Levying DP Charges?

DP charges in the share market are not levied by stock exchanges like NSE or BSE, but by:

Depository (NSDL or CDSL) - for maintaining your Demat records

Depository Participant (DP) -  for processing the transfer

Government - Goods and Service Tax (18%) on DP Charges

These charges are passed on to you by your broker, who collects them on behalf of the depositories.

Why Are DP Charges Levied?

DP charges, or Depository Participant charges, are not arbitrary fees; they serve a very specific purpose in the functioning of the Indian stock market ecosystem.

Whenever you sell shares in a delivery-based trade, your holdings need to be debited from your Demat account and transferred to the buyer’s account. This process involves a coordinated effort between:

• The Depository (CDSL or NSDL)
• Your Depository Participant (the broker)
• The Clearing Corporation

Each of these entities plays a role in ensuring the secure and seamless transfer of ownership, which is why these charges are levied.

Here's What These Charges Cover:

Important Things to Know About DP Charges

Charged Only on the Sell Side (Delivery Trades):

DP fees are charged solely on sell transactions involving your Demat account. Buying or intraday activity is exempt from these charges.

Flat Fee Per ISIN Per Day:

Regardless of how many shares you sell, the charge is applied once per ISIN (stock) per day. Selling 10 or 1000 shares of the same company will attract the same DP charge.

Not Included in Brokerage Calculators:

Many brokers show brokerage, STT, exchange fees, etc., on their cost breakdown, but DP charges are usually separately levied after the trade is executed.

CDSL vs NSDL:

Many brokers in India are linked with either CDSL or NSDL, and their depository participant (DP) transaction fees can differ accordingly. NSDL levies ₹5 per transaction, while CDSL DP charges are usually ₹5.50.

How Can You Minimise or Avoid DP Charges?

Many investors often wonder how to avoid DP charges. While you can't eliminate DP charges, you can reduce their frequency or avoid them in certain situations:

• Avoid frequent small-volume sales -  Consolidate transactions when possible.
• Buy and sell the same day - DP charges are not applicable in intraday trading, as there’s no share delivery involved.
• Opt for brokers that offer low DP charges - Brokers like Choice are known for competitive rates.
• Review your trade execution type - Delivery-based trades incur DP fees; intraday and F&O do not.

Common Misconceptions

DP charges function in the same way as brokerage fees.:

No. Brokerage is paid to the broker for executing the trade. DP charges are separate and fixed, paid for share transfer processing.

There’s a way to avoid DP charges completely -

Not really, unless you trade only intraday or in F&O (where shares don’t move into or out of Demat).

BTST (Buy Today, Sell Tomorrow) trades are free from DP charges

This is a misunderstanding. In BTST trades, although shares are bought and sold within the same trading day, they are still moved to and from your Demat account. Since the shares stay in your Demat account overnight, DP charges apply. These fees are generally fixed per security and are not influenced by the number of shares being sold.

Final Thoughts

DP charges in the share market may seem minor, but they can add up, especially for frequent traders or those investing in small quantities. Understanding these charges helps in:

• Evaluating broker cost structures
• Avoiding unnecessary deductions
• Optimising long-term returns

By choosing brokers with transparent fee disclosures and the lowest DP charges, investors can manage costs better while enjoying the benefits of digital shareholding.

FAQs

Are DP charges applicable in intraday trading?

No, DP charges are not applicable in intraday trading because shares don’t move in or out of your Demat account.

How often are DP charges levied?

They are charged per ISIN per day, only on the sell side of delivery trades.

Do all brokers charge the same DP fees?

No. DP charges vary by broker. While the depository fee is standard, brokers set their own DP charges. Some offer competitive or discounted rates, especially for high-volume traders.

Can I get a refund on DP charges?

Generally, DP charges are non-refundable, as they are service-based and incurred once a transaction is processed. However, if charged in error, you can raise a dispute with your broker.