What do DP Charges Mean?

Last Updated: 1 Oct 2025

You are on your favorite trading app (like IIFL), and you’re watching happily as the stock you bought some time ago has risen to reach your target profitable price. You have been patiently waiting for the day when you will sell the stocks and you see a fee, other than the brokerage, is being levied on your sell transaction. You go through your contract documents and do not see the reason behind an extra fee involved with selling stock.

To know the inception behind these charges, it is important to cover the basics of a Depository and its participants.

What is a Depository and its Participants?

As an investor, you trade in stocks of various companies. A platform, like the IIFL Markets app, is where you can buy and sell them at your convenience. However, there is a place where these shares are deposited while trading. The place is called a Depository.

In India, there are two depositories: National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Limited (CDSL). When you open Demat Account with any stockbroker, it operates under these two depositories.

Furthermore, every stockbroker works as an agent of the two depositories and assists customers in carrying out investment transactions. These stockbrokers, like IIFL, are called DPs, or Depository Participants.

Types of DP Charges

DP levies go beyond the familiar sell-transaction fee; they cover multiple services that keep your Demat account functional and compliant. Knowing each head helps you forecast costs and negotiate better with your broker.

• Account Opening Fee – A one-time amount some brokers collect to create the Demat relationship with CDSL or NSDL; many discount brokers waive it today.
• Annual Maintenance Charge (AMC) – A recurring fee for electronic safekeeping, periodic statements and regulatory reporting of your holdings.
• Transaction (Sell) Charge – The fixed fee per ISIN that you pay every time shares leave your account; split between depository and broker.
• Pledging/Unpledging Charge – Applied when shares are pledged as collateral for margin or loans and again when they are released.
• Dematerialisation / Rematerialisation Charge – Covers converting physical certificates to electronic form or vice-versa, including courier and handling costs.
• Off-Market Transfer Charge – Levied when you move securities directly to another Demat account outside the stock exchange clearing mechanism, such as for gifts or legacy planning.
• DIS (Debit Instruction Slip) or Custodian Fee – A small charge if you use physical instruction slips instead of online authorisation to transfer securities.

Understanding these heads clarifies why your ledger shows more than one figure under “DP charges” and helps you benchmark brokers transparently.

What are DP Charges

Investors often begin with a simple question: What are DP charges? To put it plainly, DP charges in share market are fixed fees deducted whenever you sell securities from your Demat account. The depositories offer numerous services such as corporate action handling, pledging and unpledging of shares, etc., and work in synergy with depository participants (stockbrokers). In exchange, they charge a small fee from the investors, known as DP charges, that are levied by the depositories as well as the depository participant.

Since brokerage charges are detailed in the account opening form but not the depository fee, it can become confusing if you don’t know what DP charges are.

DP Charges are levied on all the “sell” transactions through your Demat App. The charges are a flat transaction fee and do not take into account the quantity you are selling of a particular stock.

Who Levies DP Charges?

Many newcomers still ask what is DP charges, confusing them with brokerage or STT. In fact, what is DP charges in stock market refer only to the fee payable to the depository and your broker for every sell transaction. The depositories (CDSL and NSDL) and the Depository Participants impose the DP Charges. If the stock is part of the Bombay Stock Exchange, then Depository Securities Limited (CSDL) levies the DP charges. However, if the stock is a part of the NIFTY or the National Stock Exchange, the National Securities Depository Limited (NSDL) imposes the DP charges. However, exchanges can use any of these two depositories for settlement and trading.

The depository participant works as a mediator between these depositories and the investors and charges them an additional fee to be paid to the depositories.

Why are DP Charges Levied?

Stockbrokers cannot offer Demat account opening and investing services to customers until they become Depository participants. Moreover, becoming a depository participant accompanies numerous fixed costs, which can be in lakhs of rupees. Furthermore, the stockbrokers also have to pay an advanced prepaid transaction charge to the two depositories.

Stockbrokers usually charge zero Demat account opening fee and annual maintenance charges. Hence, these DP charges are extended to the investors as an additional fee. It is also the only source of revenue for such depository participants who otherwise charge a negligible fee to their customers.

Technically, these levies are classified as depository participant charges. You will see the demat account DP charges posted to your ledger a day or two after the trade settles.

Tips for Minimizing DP Charges

You cannot eliminate DP fees entirely, but smart habits can keep them negligible relative to your portfolio size.

• Trade intraday when possible, because no shares are delivered to the Demat account, the depository never debits a transaction fee.
• Use Futures & Options for short-term strategies; derivative contracts settle in cash, so no DP charge applies.
• Bundle sells orders for the same stock into one transaction per day; the depository bills per ISIN per day, so a single consolidated exit halves costs compared with multiple small sales.
• Choose a low-cost broker that passes on only the statutory component or offers gender-based concessions.
• Avoid unnecessary off-market transfers or frequent pledging cycles; each instruction attracts a separate fee that quickly compounds.
• Opt for brokers offering zero or discounted AMC on larger balances, or negotiate an AMC waiver when you maintain long-term holdings with the same participant.
• Periodically review the tariff sheet; regulations cap statutory DP fees, but broker mark-ups vary, and switching providers is seamless under the existing KYC framework.

Applying these tactics keeps statutory outflows lean, letting more of your trading profits stay invested and compounding for the long haul.

Conclusion

DP charges always remain the same, irrespective of the number of shares sold. You can always contact your stockbroker to gain clarity on the DP charges. It is always wise to know the meaning of DP charges beforehand and then go ahead with selling your shares. If you are planning to invest in the stock market, you must consider DP charges and how they can influence your profit margin in the end.

If you are still without a Demat account and want to open one, you can visit the IIFL Capital Services Limited website or download the IIFL Capital Services Limited App from the app store. The Demat account opening is simple, quick, and free of cost.

Frequently Asked Questions

Why DP charges are high?

DP charges are generally high as they are the only source of income for the depositor and its participant. As stockbrokers such as IIFL charge an otherwise negligible fee on various unique investing services, DP charge is the one fee that is levied on the investors by the depositories as well as its participants.

Are DP charges applicable for intraday trading?

No, you do not have to pay DP charges on intraday trading. DP charges are only applicable on delivery trading. However, you will have to pay the applicable brokerage when you execute an intraday trade.

How to avoid DP charges?

You can avoid DP charges by executing an intraday trade, taking part in BTST trading or making a Futures trade. If you are delivering your shares in your Demat account, you will have to pay DP charges when you sell your shares.