Everything You Need To Know About A Joint Demat Account

One of the main prerequisites for investing in the Indian stock market is to have a demat and a trading account. A trading account will help you buy and sell securities, whereas a demat account will store these securities. You can open a demat account individually or jointly along with a partner. Read to find out how to open a joint demat account jointly in India.

What Is a Joint Demat Account?

It operates similarly to an individual demat account. The only difference is that there is more than one account holder. It stores the securities purchased by the joint holders. Following are the features of a joint demat account.

• Account holders: The maximum number of account holders is three. One of the account holders would be a primary holder, and the other two are secondary holders.
• Transaction validation: Although anyone can initiate a transaction, all the account holders must approve and validate it.
• Modification: The name of the account holders cannot be changed, added, or deleted once the account is opened.
• Maintenance charges: Individual account holders need not pay separate annual maintenance charges.
• Death benefit: In the event of the death of an account holder, the remaining account holders get ownership of the account. The nominee will enjoy the account benefit if all the account holders die.

How to Open a Joint Demat Account In India?

You can open a joint account through your bank, stock broking agency, or any other depository participant. The following steps will guide you to open a joint account.

1. Choose a depository participant
   There are so many depositary participants (DP) in the market. You have to choose a DP based on the services they offer. A DP acts as an intermediary between investors and the central depository. You can approach a bank or stock broking company to open your account. You can visit their branch office or go to their website to open a joint account offline or online.
2. Submit KYC documents
   To open an account, account holders must submit KYC (Know Your Customer) documents. These include an application form, identity proof, and address proof. Upon submission of these documents, the DP will thoroughly check them.
3. Verification
   After submitting all the documents, you will have to sign a few documents in the presence of the staff members of a DP for verification. The DPs do an in-person verification of all the account holders to match the details given to them.
4. Account approval
   Once the verification process is done, the DP will approve the account. The credentials of the account will be shared with all account holders, and they can start trading immediately.

Required Documents

To open a joint account, you will need the following documents.

• Demat account application form
• KYC application form
• Passport-size photographs of all account holders
• Self-attested PAN Card copies
• Self-attested address proof – Aadhar, utility bills, passport, driving license, voter ID
• Bank account proof of the primary holder
• Cancelled cheque
• Income proof – Bank statement, salary slip, ITR acknowledgement

Benefits

• Pool resources: It allows investors to pool resources and invest in financial assets jointly.
• Lower maintenance fees: Each account holder need not pay account maintenance fees. Hence the total account maintenance fees are considerably less per account holder when compared to individual demat accounts.
• Flexibility in operating the account: Account holders can access the account and can transact from anywhere in the world and at any time. Moreover, they can track the account and benefits from anywhere.
• Estate planning: A joint demat will help in estate planning which will help in smoothly passing on the assets to the surviving account holder.
• Investment opportunities: All account holders can take advantage of the available investment opportunities together.
• Decision making: All account holders can take investment decisions together.

Things to remember while opening a joint demat account

• Approval of account holders: All account holders must participate and give their approval in all the transactions. Only then can are the transactions valid.
• No modification of account holder details: You cannot modify account holder details such as name or date of birth. In case you want to rectify the details, you must open a new demat account.
• Taxation: The capital gains tax on the profits made is solely the liability of the primary account holder.
• Only one trading account: The demat account is connected to only one single trading account, which mostly belongs to the primary account holder. Hence the communication regarding the demat account is done with the primary account holder.
• Individual demat account cannot be converted to joint account: You can not convert an individual demat account into a joint account. The only way to open an account is during the application process. Moreover, you cannot add another holder to an existing account.
• New joint demat account rules: If the existing account holders want to open a new demat account, the names of account holders in the new account must be the same and in the same sequence. Else they cannot trade or transfer the securities.

Frequently Asked Questions

1. Can I open a joint demat account in India?
   Yes, you can open a joint account in India. You can visit a branch of a depository participant or go to their official website to open an account.
2. How can I open a demat account in a joint name?
   You have to select a depository participant, submit a joint demat application form, and provide the necessary documents as proof. Once the application is verified, you will be an account holder.
3. Can two friends open a joint demat account?
   Yes, two friends can open a joint account together. However, the trading account linked to this demat account can only be one.
4. Can I convert a single demat account to a joint account?
   No, you cannot convert a single demat account into a joint account. You must open a new demat account in case you want a joint account.
5. How many joint holders can a demat account have?
   It can have a maximum of three account holders in India.
6. Who pays tax on a joint demat account?
   The primary holder is liable to pay taxes for the capital gains earned on demat account transactions.
7. After death, what happens to the joint Demat account?
   After the death of one account holder, the other account holders are entitled to the securities in the demat account. In case all the account holders die, the nominee will receive the benefits of the demat account.