Many Indians open a Demat account with excitement during bull runs but later stop using it. The account becomes dormant (inactive), yet brokers continue charging Annual Maintenance Charges (AMC). These fees can quietly drain ₹300 to ₹1,000+ every year, adding up over time.
In 2026, with rising awareness about hidden costs, smart investors are taking action to stop paying unnecessary AMC on dormant Demat accounts. This easy-to-read guide explains practical ways to avoid or minimize these charges while keeping your investments safe.
What is AMC and Why is it Charged on Dormant Accounts?
AMC (Annual Maintenance Charge) is the fee your broker (Depository Participant) charges to maintain your Demat account with CDSL or NSDL. It covers record-keeping, statements, and regulatory compliance.
Even if your account is dormant (no transactions for 12+ months), most brokers continue to levy AMC. If unpaid, the account may become frozen or you may face reactivation fees later. Typical AMC ranges from ₹300–₹900 + GST per year, depending on the broker and holdings value.
Smart Ways to Avoid High AMC on Dormant Demat Accounts
Here are the most effective methods in 2026:
1. Convert to Basic Services Demat Account (BSDA)
This is the easiest and most recommended option for small investors.
- Benefits:
- Zero AMC if holdings value ≤ ₹4 lakh
- Only ₹100 + GST if holdings between ₹4–10 lakh
- Eligibility: You must be the sole/first holder and not have any other Demat account.
How to Convert:
- Login to your broker app
- Go to “Account Settings” → “BSDA Request” or “Convert to Basic Demat”
- Submit the request (usually instant approval)
Many brokers like Zerodha automatically offer BSDA benefits based on holdings.
2. Close the Dormant Demat Account Completely
If you don’t plan to use the account, close it to stop all future charges.
Step-by-Step Process to Close Demat Account:
- Sell or transfer all securities to another Demat account.
- Clear any outstanding dues (brokerage, AMC, taxes).
- Download and fill the Account Closure Form from your broker’s website.
- Submit the form online (for many brokers) or offline with supporting documents.
- Receive confirmation within 7–30 days.
Important: Most brokers do not charge closure fees, but you must have zero balance.
3. Switch to a Zero AMC Broker
Many modern brokers offer lifetime zero AMC:
- Groww — Zero AMC
- Upstox — Zero AMC
- Dhan — Zero AMC
- FYERS — Zero AMC
- Stock — Zero AMC
Process:
- Open a new account with a zero-AMC broker.
- Transfer your holdings using CDSL/NSDL Easiest or manual delivery instruction slip (DIS).
- Once transfer is complete, close the old account.
Transfer usually takes 3–7 days.
4. Freeze Your Demat Account
If you want to keep the account but not use it for a long time:
- Submit a Freeze Request Form to your broker.
- The account becomes inactive for transactions, and many brokers stop or reduce AMC.
- You can unfreeze it anytime when needed.
This is a good middle option for security and cost-saving.
5. Merge Multiple Demat Accounts
Having multiple accounts multiplies AMC costs. Consolidate holdings into one account and close the extras.
6. Check for Illiquid Holdings Benefit
If your account holds only illiquid, suspended, or zero-value securities, NSDL/CDSL may treat it as eligible for closure with zero AMC.
Comparison of Options (2026)
| Option | Best For | AMC Impact | Effort Level | Time Required |
| Convert to BSDA | Small holdings (< ₹10L) | Zero or ₹100 | Low | 1-3 days |
| Close Account | No future use | Zero | Medium | 7-30 days |
| Switch to Zero AMC Broker | Active or long-term users | Zero | Medium | 10-20 days |
| Freeze Account | Temporary pause | Reduced/Stopped | Low | 2-5 days |
Things to Consider Before Taking Action
- Tax Implications: Transferring shares is not a sale, so no capital gains tax. But selling before closure may attract tax.
- Security: While closing, ensure no pending corporate actions or dividends.
- Reactivation Cost: If you close and want to reopen later, you’ll pay fresh account opening charges.
- Nominee & Records: Update nominee before closure and keep statements for future reference.
- Multiple Holders: Joint accounts need signatures from all holders.
Best Practices to Avoid AMC in Future
- Choose zero-AMC brokers when opening new accounts.
- Regularly review all your Demat accounts (at least once a year).
- Maintain minimum activity or convert to BSDA proactively.
- Use one consolidated Demat account for simplicity.
- Set calendar reminders for AMC payment or review.
Conclusion
Paying high AMC on a dormant Demat account is an unnecessary expense in 2026. Whether you convert to BSDA, close the account, switch to a zero-AMC broker, or freeze it, taking action today can save you hundreds or thousands of rupees every year.
Don’t let inactivity cost you money. Review your Demat account status right now, choose the best option based on your needs, and secure your hard-earned money.
A little effort today brings big savings tomorrow. Take control of your Demat charges and invest smarter.
FAQs
Q1. What happens if I don’t pay AMC on my dormant Demat account?
A: Your account may become frozen. You’ll have to pay pending AMC + reactivation fees later.
Q2. Is BSDA available for all investors?
A: Yes, if you are the sole/first holder and meet the holdings value criteria.
Q3. Can I close my Demat account online?
A: Yes, many brokers like Zerodha, Groww, and Upstox allow online closure if there are no holdings.
Q4. Are there any charges to close a Demat account?
A: Generally no, but you must clear all dues first.
Q5. Which brokers offer lifetime zero AMC in 2026?
A: Groww, Upstox, Dhan, FYERS, and m.Stock are popular choices.
Q6. How long does it take to transfer holdings to another broker?
A: Usually 3–7 working days.
Q7. Should I freeze or close a dormant account?
A: Freeze if you might use it later. Close if you don’t need it anymore.
Q8. Does closing a Demat account affect my CIBIL score?
A: No. It has no impact on your credit score.