Trading of the shares and securities in the paper form implies that you have to carry tons of paperwork. But now with technological innovations, one can open a demat account and thus, can buy and sell shares and securities in electronic form. Below0given are some points that will help you to know some major benefits of opening a Demat account.
- No risk of losing or getting documents forged: Before Demat accounts were in the picture, shares were held by the investors in the physical form which implies storing dozens of paper documents or certificates. Also, paper documents are more prone to lose, forgery, theft, or tampering. Over the period, the paper starts decaying, and thus, ink may leave dabs. With the emergence of the Demat account, all the shares are now dematerialized and stored in electronic form which provides 100% safety and security.
- Reduced time and costs: When people used to deal in physical share certificates they used to pay additional charges such as stamp duty, handling expenses, or brokerage charges. Also, all these expenses were difficult to calculate beforehand. But now the Demat account has changed it all. All these costs are eradicated. Only brokerage charges are paid by the investors and these charges are pre-determined. Now that securities are held in digital form it has made buying and selling of shares easier and faster. Transactions made through the Demat account are affordable and seamless.
- Holding multiple investments: Not only shares but Demat account also allow the investors to hold various other investments such as stocks, bonds, government securities, mutual funds, and many others. Previously having securities in the physical form involved maintaining thousands of records making it a tedious job. But now you can hold as many securities as you want without worrying about such responsibility. Also, if a particular company whose securities you have invested in is thinking of bringing any kind of change to its stocks, then the same is automatically updated in your Demat account.
- Eliminating the issues with odd lots: Trading of the shares and securities taking place in the physical form is to be quantified. If investors want to make a large number of profits, then the limit on the number of securities being traded should be eliminated. The main benefit that a Demat account offers is the convenience at which the investors now can deal with odd lots and single security deposits.
- No TDS on securities: According to the rule passed by The Central Board of Direct Taxes (CBDT), when the payments are made through a Demat account the no tax deduction at source (TDS) is to be paid by the investors. Also, now no TDS is deducted when an investor receives interest on his or her bonds and securities.
Bottom Line
Now that you are aware of the several benefits offered by the Demat account, then what are you waiting for? Open a Demat account and avail all the given benefits. You can visit 5paisa to know how to open a Demat account. Before opening a Demat account is to be made sure by the investors that the securities in which they have invested should be saved in the Demat mode.