Can I Open A Demat Account Without A Pan Card?
Submitting a PAN Card along with the set of other documents is mandatory while opening Demat account. You can upload A copy of the PAN Card while opening a Demat account online. You also need to carry the original copy of your PAN Card while visiting the DP (Depository Participant). Also, if you are planning to open demat account with joint holders, each of the account holders must submit his PAN Card.
Why is submitting a PAN Card mandatory to open a demat account?
PAN i.e. Permanent Account Number is an essential document for all the citizens of India. The Income Tax Department can track all the financial transactions and activities carried out by you through your PAN Number. PAN helps them to identify all the transactions along with the amount and other details.
Also, every individual can have only one PAN Card linked with his name. Also, your PAN number remains the same throughout your lifetime irrespective of whether you avail of the citizenship of other countries. It helps the government to detect fraudulent activities. Therefore, it is an important document when it comes to understanding the financial status and activities of an individual. Therefore, opening a demat account without a PAN Card is not possible.
Some time ago, it was possible for investors to invest up to Rs. 50,000 in mutual funds without a PAN Card. However, it is no longer possible due to the recent modifications in the SEBI norms. If you want to invest in mutual funds, bonds, stocks, or any other securities, it is mandatory to submit a PAN Card. Even if you had invested earlier in mutual funds without a PAN Card, you will have to submit it to continue the investment in the future. Therefore, it is pretty evident that investing in the Indian financial markets is impossible if you don’t have a PAN Card.
However, if you are resident of North Eastern states like Mizoram, Nagaland, Arunachal Pradesh, Nagaland, Tripura, or Sikkim and belong to the scheduled tribe community, you are exempted from this rule. It means that you can invest up to Rs. 50,000 in the Indian financial market without a PAN Card if you fall in the ST category and reside in one of the aforementioned states. However, you must submit other valid address and identification proofs to avail of this facility.
How many Demat Accounts can be opened with a PAN Card?
It is possible to open multiple demat accounts with one PAN Card. The option of opening multiple demat accounts is provided to investors because you might feel the need to have separate demat accounts for different securities. For example, you may intend to invest in only stocks through one demat account and the other demat account can be reserved for other securities like mutual funds, bonds, government securities, etc.
You may also open multiple demat accounts with one or multiple DPs. In this latter case, the demat account opening charges, AMC, brokerage, and other fees will vary for each DP. Therefore, you can make a decision that suits your requirements and budget.
Also, having a PAN Card is not the only requirement for opening a demat account. You must also produce other KYC documents that validate your identity and address like Aadhaar Card, PAN Card, voters ID, Passport, or any other valid KYC document.
How to create a demat account?
To create a demat account, you can visit the website of DP and fill an account opening form. You need to submit the above-mentioned KYC documents along with a copy of PAN Card online to complete the verification. You also need to provide your bank details, a copy of the canceled cheque, and other financial documents like Form 16, bank statement, or acknowledgment of ITR receipt.
There is no need to provide a separate set of documents to open a trading account as most DPs offer a 2-in-1 demat account and trading account to their customers. Once you submit these documents, you should attend a physical verification round with all the original copies of the documents. After that, your Demat account will open in a few days.
