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March 9, 2023

Can a minor open a Demat account?

In India, a minor is a person who has not yet attained the age of 18 years. A Demat account is a type of account that allows investors to hold and trade in electronic form securities such as stocks, bonds, and mutual funds. The Securities and Exchange Board of India (SEBI) has laid down certain guidelines for opening a Demat account, including the eligibility criteria for account holders. In this article, we will discuss whether a minor can open a Demat account.

Can a Minor Open a Demat Account?

Yes, a minor can open a Demat account, but only in a specific type of account known as a minor Demat account. A minor Demat account is a type of Demat account that is opened in the name of a minor, with a guardian appointed to manage the account until the minor attains the age of 18 years. The guardian can be either a natural guardian, such as the minor’s parents, or a legal guardian appointed by the court. You would know when you explore the question – of the best trading app in India.

Requirements for Opening a Minor Demat Account

  • To open a minor Demat account, the following requirements must be fulfilled:
  • The minor must be at least 10 years old.
  • The guardian must have a Demat account of his/her own.
  • The guardian must be willing to be appointed as the guardian of the minor’s Demat account.

The guardian must submit the necessary documents, including:

  • Identity proof of the minor, such as the birth certificate or passport.
  • Identity proof of the guardian, such as a PAN card, Aadhaar card, or passport.
  • Address proof of the guardian, such as the Aadhaar card, passport, or driving license.
  • Photographs of the minor and guardian.

The guardian must sign the account opening form on behalf of the minor.

The guardian must provide a declaration stating that the securities held in the minor’s Demat account will be beneficially owned by the minor. The more you know about how to open a trading account, the better becomes understanding of it.

Benefits of a Minor Demat Account

A minor Demat account has several benefits, including:

  • Tax Benefits: Any income earned from the securities held in the minor’s Demat account is clubbed with the income of the guardian for tax purposes.
  • Educational Purpose: The securities held in the minor’s Demat account can be used for educational purposes, such as funding the child’s education.
  • Investment Planning: A minor Demat account can help in planning for the future by starting early investments for the child.
  • Safe and Secure: Holding securities in electronic form is safer and more secure than holding physical securities.

Conclusion

In conclusion, a minor can open a Demat account in India, but only in the form of a minor Demat account. The account must be managed by a guardian until the minor attains the age of 18 years. A minor Demat account has several benefits, including tax benefits, educational purposes, investment planning, and safety and security. Therefore, if you want to start investing for your child’s future, a minor Demat account can be a great option. So, try knowing how to open a trading account and keep things moving in the right shape.

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