What is AMC (Annual Maintenance Charge)?

The Annual Maintenance Charge (AMC) is a recurring fee charged by a Depository Participant (DP), such as a bank, brokerage firm, or financial institution, to maintain a Demat account (Dematerialized account) in India. A Demat account is used to hold and trade securities like stocks, bonds, mutual funds, and exchange-traded funds (ETFs) in electronic form, under the regulation of the Securities and Exchange Board of India (SEBI) and depositories like the National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). The AMC covers the costs of maintaining the account, ensuring secure storage of securities, and providing services like transaction processing and portfolio tracking. Below is a detailed explanation of AMC, its components, variations, and ways to minimize it.

What is AMC and Why is it Charged?

The AMC is a fee levied by the DP to cover the operational and administrative costs of managing a Demat account. It ensures the account remains active and functional, allowing investors to hold, buy, and sell securities seamlessly. The key reasons for charging AMC include:

• Depository Services: Covers fees paid by the DP to depositories (NSDL/CDSL) for maintaining electronic records of securities.
• Account Maintenance: Includes costs for updating account details, issuing statements, and providing online access to the account via the DP’s platform or app.
• Transaction Support: Supports processing of credits (e.g., when buying shares) and debits (e.g., when selling shares) in the Demat account.
• Customer Support: Funds services like customer care, technical support, and portfolio management tools offered by the DP.
• Regulatory Compliance: Ensures adherence to SEBI and depository regulations, including periodic audits and KYC updates.

AMC Charges for Demat Accounts

The AMC varies across DPs and depends on factors like the type of account, the DP’s business model (discount vs. full-service broker), and the value of holdings. Here’s a breakdown:

1. Standard Demat Account

   For regular Demat accounts, AMC is charged annually or quarterly, debited directly from the linked bank account.

   • Range: ₹300–₹900 per year (plus GST, typically 18%).
   • Examples:
     • Zerodha: ₹300 + GST per year.
     • ICICI Direct: ₹700 per year (waived for the first year).
     • Angel One: ₹240 per year (₹20/month + taxes, from second year).
     • HDFC Securities: ₹250–₹750 per year (waived for first year in some cases).
     • SBI Securities: ₹750 per year (₹500 with e-statement).
2. Basic Services Demat Account (BSDA)

   Introduced by SEBI for small investors with holdings up to ₹4 lakh, BSDA accounts have lower or no AMC.

   • Range:
     • ₹0 if holdings are below ₹4 lakh.
     • ₹100–₹200 per year if holdings are between ₹4 lakh and ₹10 lakh.
     • Regular AMC (₹300–₹900) if holdings exceed ₹10 lakh.
   • Examples:
     • Zerodha: ₹0 AMC for BSDA with holdings < ₹4 lakh; ₹100 for ₹4–10 lakh.
     • ICICI Direct: ₹300 for BSDA with holdings up to ₹10 lakh.
     • Upstox: ₹0 AMC for holdings < ₹4 lakh.
   • Eligibility: Only one BSDA per investor (as first or sole holder), and holdings must be within the specified limits.
3. Waivers and Promotions

   Many DPs offer AMC waivers to attract new customers or for specific account types.

   • First-Year Waivers: DPs like Upstox, Groww, IIFL, HDFC Securities, and ICICI Direct often waive AMC for the first year.
   • Lifetime Free AMC: Some brokers (e.g., Upstox for BSDA with holdings < ₹4 lakh) offer lifetime zero AMC for eligible accounts.
   • Promotional Offers: Brokers like Bajaj Broking and Angel One may waive AMC for specific plans or periods.

Comparison of AMC Across Popular DPs

The AMC varies significantly among DPs, with discount brokers generally charging lower fees than full-service brokers or banks. Below is a comparison (as of July 28, 2025):

Factors Affecting AMC

The AMC for a Demat account can vary based on several factors:

• DP Type: Discount brokers (e.g., Zerodha, Upstox) charge lower AMC compared to full-service brokers (e.g., ICICI Direct, HDFC Securities) or banks, which offer additional services like research and advisory.
• Account Type: BSDA accounts have lower or no AMC for holdings up to ₹4 lakh, while regular accounts incur standard charges. NRI accounts may have higher AMC due to additional compliance requirements.
• Holding Value: For BSDA accounts, AMC increases as holdings cross ₹4 lakh or ₹10 lakh thresholds.
• Promotional Offers: Many DPs waive AMC for the first year or offer lifetime free AMC for BSDA accounts to attract new customers.
• Service Level: Full-service brokers charge higher AMC for value-added services like portfolio management tools, while discount brokers keep costs low with minimal services.
• Payment Frequency: Some DPs charge AMC quarterly (e.g., ₹75–₹225 per quarter) instead of annually, but the total remains within the ₹300–₹900 range.

Ways to Reduce AMC

Investors can minimize AMC costs through the following strategies:

• Opt for BSDA: Choose a Basic Services Demat Account if your holdings are below ₹4 lakh to enjoy zero AMC, or up to ₹10 lakh for reduced AMC (₹100–₹200).
• Select Discount Brokers: Brokers like Upstox, Groww, and Zerodha offer lower AMC (₹150–₹400) or first-year waivers compared to full-service brokers.
• Look for Waivers: Take advantage of first-year AMC waivers offered by DPs like Angel One, ICICI Direct, or Bajaj Broking.
• Monitor Holdings: Keep holdings below ₹4 lakh for BSDA eligibility to avoid AMC entirely.
• Compare DPs: Evaluate AMC structures across DPs to choose one with low or no AMC, especially for small investors.
• Use 3-in-1 Accounts: Banks like Kotak Securities or ICICI Bank offer 3-in-1 accounts (savings, trading, Demat) with waived AMC for the first year, reducing initial costs.

Additional Considerations

• Other Charges: Besides AMC, Demat accounts incur account opening fees (₹0–₹900), transaction charges (₹10–₹50 per trade), and other fees (e.g., dematerialization, SMS alerts). Factor these into your overall cost analysis.
• Brokerage Fees: If the Demat account is linked to a trading account, brokerage charges (e.g., ₹20/order or 0.1–0.5%) impact overall costs. Discount brokers like Groww and Upstox offer zero brokerage for equity delivery, reducing expenses.
• Transparency: Reputable DPs like Bajaj Broking and IIFL emphasize transparent fee structures. Always check the DP’s website for the latest AMC details.
• Account Inactivity: Some DPs may charge AMC even for inactive accounts, so consider closing unused accounts to avoid unnecessary fees.
• Tax Implications: AMC is subject to GST (18%), which is added to the quoted fee. Ensure your linked bank account has sufficient funds to avoid penalties for non-payment.

Tips for Managing AMC

• Choose BSDA for Small Portfolios: If your investments are modest, opt for a BSDA to save on AMC.
• Compare DPs: Select a DP with low or no AMC, such as Upstox or Groww, especially if you’re a beginner.
• Leverage Waivers: Take advantage of first-year AMC waivers or promotional offers to reduce initial costs.
• Monitor Fees: Regularly check your account statement for AMC deductions to ensure transparency and avoid surprises.
• Evaluate Services: If paying higher AMC for a full-service broker, ensure you benefit from their advisory or research services.

Conclusion

The Annual Maintenance Charge (AMC) is a recurring fee, typically ₹300–₹900 per year, charged by Depository Participants to maintain a Demat account, covering depository services, account management, and compliance. For small investors, Basic Services Demat Accounts (BSDA) offer zero AMC for holdings below ₹4 lakh or reduced AMC (₹100–₹200) for holdings up to ₹10 lakh. Many DPs, such as Upstox, Groww, Angel One, and ICICI Direct, waive AMC for the first year, while discount brokers generally offer lower fees than full-service brokers or banks. By choosing a BSDA, selecting a cost-effective DP, and leveraging waivers, investors can minimize AMC costs while maintaining a Demat account for secure and efficient investing in the Indian stock market.