What is AMC?
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.
What happens if you don't pay AMC fees?
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.