How to Open Joint Demat Account?

How to Open Joint Demat Account?

Demat accounts have become an important tool for investors. It allows them to keep their stocks in electronic format in India. An investor can hold their bonds, mutual funds, equities, and other financial instruments in a digital format with a Demat account.

While individual Demat accounts are the norm in India, many investors would want to share their Demat holding with their family or loved ones. So, many investors may have questions like, “Can I open a joint Demat account?”

Can I Open a Joint Demat Account?

You can create a joint Demat account. Many investors have benefited from opening a joint Demat account online.  If you wish to invest in the stock market with a spouse, family member, or friend, joint Demat accounts are the right option. If one account holder is unavailable to complete a transaction, having a joint Demat account joint holders permits both account holders to purchase and sell assets. 

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Table of Content

  1. Can I Open a Joint Demat Account?
  2. What is a Joint Demat Account in India? 
  3. How to Add Joint Holder in Demat Account?
  4. Can I Open a Joint Demat Account? 
  5. Benefits Of Joint Demat Account
  6. Documents Required for Joint Demat Account
  7. Things to Remember about Joint Holders in Demat Account
  8. Rules of a Joint Demat Account

What is a Joint Demat Account in India? 

Joint Demat accounts are the preferred choice for many investors in India. Two or more people can own joint accounts, and they each have an equal stake in the securities stored within the Demat app. The account can be operated jointly by the joint holders, which lets them buy and sell stocks, check their holdings, and get statements. Joint Demat accounts are ideal for investors who want to divide the costs and risks of stock market investment

How to Add Joint Holder in Demat Account?

Adding a joint holder to your Demat account is an easy process. If you have a Demat account, you must apply for a joint account with the relevant supporting papers to the depository participant, or DP. Copies of the PAN cards for each account holder, along with proof of identity and address, may be required documentation. Once the application has been processed, the joint account holder will be added to your Demat account. 

Can I Open a Joint Demat Account? 

Yes, you can open a joint demat account online. Below are the steps to follow. 

Step 1: Request to open a shared demat account with a participant in the depository
Visit a depository employee. All joint account holders' KYC documents will be requested by the broker.

Step 2: Send in the KYC paperwork
Turn in the KYC documentation in the following phase along with your Aadhar card, PAN card, and other documents. Each joint account holder will need to provide their individual KYC documents, as was previously specified.

Step 3: In-person verification
Joint demat accounts need to have each account holder personally verified. A broker completes the process quickly and conveniently.

Step 4: Your joint Demat account will be created at this stage. Your joint Demat account will be opened after you have finished the above three stages. 

Benefits Of Joint Demat Account

Investing through a joint Demat account has the following benefits for the joint holders: 

  1. Collaborative investments: A shared Demat account encourages cooperation among joint holders, giving them the ability to pool funds and come to informed collective judgments on investments.
  2. Convenience and shared management: The investment management process is made easy by each joint holder's equal access to the shared Demat account.
  3. Contingency planning: The "Anyone or Survivor" holding type guarantees a seamless transfer by automatically making the surviving joint holder the only owner of the account in case of an unfortunate event of the death of one account holder.
  4. Family investment management: A shared Demat account enables family members to monitor and manage their investments from a single location which is helpful for them.
  5. Simple asset transfer: Transferring securities to the name of the surviving joint holder in the tragic event of one of the joint holders passing away is a simple process that avoids legal complications.

Documents Required for Joint Demat Account

Here's a list of necessary documents needed to open a Demat account in India:

  • Verification of identity: You’ll be required to verify your Voter ID, driver's licence, Aadhaar card, etc.
  • Address verification: You’ll need to confirm your address with Voter ID, passport, ration card, Aadhaar card, etc.
  • Proof of income: Copy of Income Tax Return (ITR) acknowledgment
  • Cancelled cheque
  • PAN card
  • Passport-size photographs

In addition to these, the Depository Participant might request extra documents to initiate trading.

Things to Remember about Joint Holders in Demat Account

When setting up a joint investment account for your group Investment, here are important details to be aware of:

  • You'll have to pay an Annual Maintenance Charge (AMC) depending on your brokerage firm.
  • Transaction fees apply depending on the size of your trades.
  • Transferring Demat account holdings may also carry a fee.
  • Closing your Demat account may also incur a fee, depending on the broker.
  • Every account holder's involvement is necessary for any transaction.
  • In the event of someone's demise, ownership transfers to another Demat account holder. If all account holders pass away, the nominee receives all the Demat holdings.

Rules of a Joint Demat Account

You can get to know the joint Demat account rules and some important points that require your consideration.

Approval from Holders 

Each account holder must approve and verify each transaction made using a joint Demat account. The transaction won't proceed unless the necessary consent is obtained. 

Tax Repercussions

The capital gains tax on the profits made via the joint Demat account must be paid by the primary holder of the account.

Shared Trading Account

Both a trading account and a Demat account are required to transact in the stock market. One trading account, often held by the primary holder, is connected to the shared Demat account. The primary holder will receive all account-related communications that are required. 

No Modifications Allowed

You are not allowed to make changes to the details after opening your joint Demat account. This applies to the names, birth dates, and other information of the account holders. 

Conclusion
So, if you wish to share your investments with another individual, you can register joint Demat accounts as an investor. A joint account has benefits for estate planning, simplicity, reduced risk, and cost-effectiveness. Adding a joint owner to a Demat account is easy, but the depository participant needs to obtain the necessary documentation.

Joint Demat Account FAQs

In India, a demat account may have a maximum of three joint holders.

Yes, you can open a joint account with individuals who are not family members or spouses; for example, friends or business partners can open joint demat accounts holders.

No, joint holders can manage the account jointly and have equal rights to the securities held in the account.

No, in order to close the demat account, all joint holders must agree to do so

No, the demat account must be linked to the same bank account as all joint holders.

You need to print out an application form from the DP’s website, fill it out, and submit it to the DP’s branch to open a Demat joint account offline, where you will follow the verification process.

The primary or first holder of the joint Demat account is liable to pay taxes on the P&L.