When you open a Demat account with Zerodha, one of India’s most popular discount brokers, you may come across the term AMC, or Annual Maintenance Charge. Many investors, especially beginners, often wonder how Zerodha deducts AMC and what exactly they are paying for. Understanding how AMC works, when it is charged, and how it is deducted can help you manage your account more effectively and avoid unnecessary confusion or surprise deductions.
What Is AMC in Zerodha?
Definition of Annual Maintenance Charge
AMC stands for Annual Maintenance Charge, which is a fee levied for the upkeep of your Demat account. In simple terms, it’s the cost you pay to keep your Demat account active with the depository participant in this case, Zerodha. While your trading account is used for buying and selling shares, your Demat account is where your shares are stored electronically.
Why AMC Is Necessary
The AMC covers various backend services such as:
- Safe custody of securities
- Account statements and transaction records
- Access to platforms like Console and Kite
- Compliance and regulatory support
Even if you are not actively trading, your Demat account needs to be maintained, which is why AMC is charged regardless of trading activity.
How Much AMC Does Zerodha Charge?
Current AMC Rates
Zerodha charges an AMC of ₹300 plus 18% GST per year for the Demat account. This comes to a total of ₹354 annually. It is important to note that AMC is applicable only to the Demat account, not the trading account. Zerodha does not charge AMC for trading accounts.
Free AMC for Certain Accounts
Zerodha offers free AMC for:
- Minor Demat accounts
- BSDA (Basic Services Demat Account) if you meet the eligibility criteria
For BSDA, the AMC can be lower or even zero if your holdings remain under ₹50,000. If they exceed that, the AMC is charged at a discounted rate.
How Zerodha Deducts AMC
Automatic Deduction from Trading Account
Zerodha deducts AMC automatically from your trading account balance. This deduction typically happens annually on the anniversary date of account opening or sometimes in the first week of the new financial year, depending on your account type. If there is sufficient balance in your trading account, the amount is debited without requiring any action from your side.
What If There Is Insufficient Balance?
If your trading account does not have enough funds when AMC is due, the charge is kept pending. Zerodha may send a reminder via email or SMS. Once you add funds to your account, the pending AMC is automatically deducted. Failing to maintain AMC payments can result in restrictions on accessing some features or future trading activity.
Where to Check AMC Deduction
You can view the AMC deduction in your ledger on the Zerodha Console platform. To check:
- Log in to Console
- Go to Funds
- Click on Statement or Ledger
Here, you will see all debits and credits including the AMC deduction, listed with date and description.
Can You Avoid or Reduce AMC?
Switch to BSDA
One way to reduce AMC charges is by converting your regular Demat account to a BSDA if you qualify. BSDA is designed for small investors and offers reduced AMC:
- ₹0 AMC if your holdings are below ₹50,000
- ₹100 + GST if holdings are between ₹50,000 and ₹2 lakh
To convert to BSDA, you need to submit a request to Zerodha through their support channels.
Close the Account if Not in Use
If you are no longer using the account, closing it can help avoid future AMC deductions. Zerodha allows you to close your Demat and trading accounts by submitting a closure form with your signature and client ID. Before closure, you must ensure that there are no securities or funds in the account.
AMC and Tax Considerations
Claiming AMC as Expense
For active traders or those who file business income, AMC charges can often be claimed as a business expense under maintenance costs. This reduces your overall tax liability. Always keep a copy of the AMC invoice and consult your tax advisor for accurate filing.
GST Component
Since the AMC includes 18% GST, it is advisable to take note of it while calculating overall investment expenses. The GST is part of your ledger entry and is shown clearly along with the base AMC amount.
AMC for Joint and Minor Accounts
Joint Accounts
For joint accounts, the AMC remains the same ₹300 + GST per year. The deduction process remains identical and will be debited from the primary holder’s trading account.
Minor Accounts
Minor Demat accounts opened with Zerodha do not attract AMC until the minor turns 18. After that, the account can be converted to a standard account, and AMC will start applying from that point forward.
AMC and New Account Holders
When Is AMC First Deducted?
When you open a Zerodha Demat account, AMC is not charged immediately. Usually, it is charged on the anniversary of the account opening date or at the end of the financial year depending on your onboarding schedule. For example, if you opened your account in July, your AMC might be charged every July moving forward.
First-Time AMC Deductions
New users may be surprised by AMC deduction if they are unaware of the annual fee. Zerodha usually sends notifications or email reminders when the fee is deducted. Always make sure to keep some balance in your trading account to cover annual fees to avoid service disruption.
Understanding how Zerodha deducts AMC is essential for every Demat account holder. Although the fee itself is relatively low, staying informed about when and how it is charged can help you avoid confusion and maintain a smooth trading experience. Zerodha makes the process transparent and automated by deducting the amount directly from your trading account. If you are eligible for BSDA or no longer use the account, taking steps to reduce or avoid AMC is entirely possible. Keep an eye on your ledger, ensure there are sufficient funds, and stay updated on fee schedules for worry-free investing with Zerodha.