Understanding Depository Participant (DP) Charges

Depository Participant (DP) charges are among the most common fees you may encounter while investing or trading in the stock market. As depositories offer various services, such as pledging and unpledging of shares, they work in collaboration with DPs or stockbrokers. 

In exchange, investors need to pay a small amount as fees, which is known as DP charges. Both the stockbroker and depository levy these charges. You have to pay DP charges when you trade stocks through a broker. These charges apply during the sale of shares from your Demat account. DPs levy these charges to cover the cost of their services in maintaining and managing your investments.

Unlike brokerage charges, DP charges are fixed. These charges are applicable on a daily basis and for each stock, irrespective of the quantity you sell. Consider the following example to understand this concept better.

For instance, if you sell 30 stocks of Company X, the charges will be ₹13.5 plus 18% GST. In case you sell another 30 stocks of the same company, the DP charge will only be levied once. However, if you sell 30 stocks of Company X and 30 stocks of Company Y, you will be levied DP charges of ₹13.5 plus 18% GST twice.

The calculation of these charges can vary depending on the DP and the specific services offered. 

 

Now that you know the meaning of DP charges, here is the general method to calculate it:

1. Identify the Type of Transaction: Determine whether it is a purchase (buying) or sale (selling) of securities

2. Determine the Transaction Value: For purchases, it is the total value of bought securities; for sales, it is the total value of securities sold 

3. Check the DP Charge Structure: DP charges may be based on a flat fee or a percentage of the transaction value; verify this with your DP

4. Calculate the DP Charges: Multiply the transaction value by the applicable DP charge rate (either flat fee or percentage)

 

Example:

Suppose you have sold securities with a transaction value of ₹1 Lakh, and the charges are 0.02% of the transaction value.

 

DP charges = Transaction value X DP charge rate

 

DP charges = ₹1,00,000 X 0.02% = ₹200

 

In this example, the charges for the sale transaction would be ₹200.

 

It is important to note these charges can vary across different depository participants. Hence, you must refer to the specific fee structure that your chosen DP provides for accurate calculations.

These charges vary depending on the depository (CDSL and NSDL) and the DP. The following are the charges these depositories levy:

• National Securities Depository Limited (NSDL)

The NSDL is a depository of the National Stock Exchange (NSE) and is promoted by the United Trust of India (UTI). 

 

Various depository participants are members of NSDL offering stock brokerage services to investors. The DP charges that NSDL levies per transaction per day is ₹13 plus ₹4.50.

•  Central Depository Services Limited (CDSL)

The Bombay Stock Exchange (BSE) promoted CDSL till 2019, after which CDSL could accept sponsors from various banks. With the help of associated DPs, CSDL manages and records the stockholdings in your Demat account.

 

The CDSL levies DP charges of ₹13.5 plus ₹4.50 on every sale transaction per day.

Here are a few points that you need to know:

• The charges do not appear on the stock contract, as these are directly accounted for on the ledger

• The charges will be the same as normal deliveries for the Buy Today Sell Tomorrow Trading (BTST)

• SEBI has done away with DP charges on the redemption of mutual funds since 2019

• These charges are levied once per scrip, even if you sell multiple stocks during the same transaction