Annual Maintenance Charges or AMC is charged in order to maintain your Demat account. The amount of AMC that you have to pay depends on the stock broker you are with. It ranges from Rs150, most charge Rs 300 and some even charge as much as RS 800/900 going upwards from the second year, depending upon the type of demat account you choose- individual or joint accounts, NRI demat accounts, demat and trading accounts or 3-in-1 accounts. There are brokers who allow lifetime free AMC to the customers without any terms and conditions.
Often, as compared to discount brokers, full-service brokers charge a higher amount of AMC. The price for your Demat AMC does not depend on whether you hold shares in your Demat account or not. This fee has to be paid for the maintenance of your accounts, regardless of whether you are an active investor or not, or whether you do positional trading or intraday trading. Unless you are with some broker that charges Zero AMC.
Brokers often waive off AMC for the first year and charge AMC from the 2nd year onwards. Some charge zero AMC services to the account holder who has no shares in the account till the purchase of first share.
If you have not paid the Demat account AMC for a longer time, you may face situations mentioned below.
1 Until you have made the deposit to clear the remaining balance, the account will be locked and you will not be able to access it.
2 Every year, the demat account will continue to rise until you are able to finalize the payment to clear the outstanding balance.
You should pay off your AMC as soon as possible. If you no longer use the Demat account, it is advisable to ask for closure.