NSDL & CDSL: Zero brokerage doesn't mean zero cost; Understand DP charges on demat account

Cost of buying and selling shares

For your market investments, you may be using a discount broker that promises zero brokerage on the buying and selling of shares. However, if you check your ledger after selling shares, you will notice a small deduction apart from taxes such as Securities Transaction Tax (STT). This deduction DP charge, which every investor selling shares has to pay, no matter which broker they use.

The depository participant (DP) charge is linked to how your shares are stored in the stock market system. In India, all shares are held in electronic form in a demat account, maintained with either National Securities Depository Limited (NSDL) or Central Depository Services Limited (CDSL). These are the two government-regulated depositories that act as the safekeepers of your stocks.

When you sell, the shares move out of your demat account to the buyer’s account. This debit transaction triggers a small fee from the depository, but NSDL or CDSL does not charge you directly. They charge your depository participant, which is your broker or bank, and then your broker passes that cost to you as the DP charge.

Zerodha, through CDSL, charges Rs 15.34 (Rs 3.5 CDSL fee + Rs 9.5 Zerodha fee + Rs 2.34 GST) per scrip per day. ICICI Direct charges around Rs 20 per debit instruction through NSDL/CDSL.

For this, an ISIN, a unique code assigned to each stock, so the fee is per stock per day, not per share. If you sell 10 shares or 1,000 shares of the same company on the same day, the DP charge will be the same because it depends on the ISIN, not the quantity. But if you sell two different stocks, then you will be charged twice because two ISINs are involved.

DP charges are levied only on selling because that is when the shares leave your demat account. Buying shares does not attract DP charges since it is a credit transaction. This is also why intraday trades that are squared off the same day do not involve DP charges — no shares are delivered from your demat account.

Read the fine print

Many new investors are surprised to learn about DP charges because brokers prominently advertise zero brokerage on delivery trades. While it is true that you are not paying brokerage to the broker for delivery buying or selling, you still pay statutory DP charges that come from the depository system. These charges are small on a single trade, but they can add up if you sell shares from multiple stocks frequently.

Understanding the DP charge helps you read your contract note and ledger better. It also explains why even free delivery trades are not completely free. The next time you sell shares and see a deduction of Rs 15–Rs 20 per stock, you will know that it is your broker passing on the NSDL or CDSL DP charge plus their small fee and the GST.