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Zerodha launches secondary demat accounts, letting investors separate long-term and short-term holdings for better tax management.
News18
Online brokerage Zerodha has introduced a secondary demat account option that could change how investors manage taxes on their trades and long-term holdings.
Until now, investors were forced to keep all their shares in a single demat account, where the FIFO (First In, First Out) rule applied universally. This often worked against taxpayers, as the system assumed that the oldest shares were sold first. In practice, this meant that when an investor sold stocks for short-term gains, their low-cost, long-term holdings were also consumed, leading to higher short-term capital gains (STCG) tax liability.
According to financial expert Sujit Bangar, who shared the thread on X, investors can now open an additional demat linked to the same trading account. FIFO will now be applied per account, enabling a clean separation between long-term investments and short-term trades. This distinction can translate into significant tax savings.
Bangar highlighted a case where a taxpayer paid Rs 1.6 lakh extra in taxes last year due to the unified FIFO system. With two demats, such taxpayers could save lakhs annually. He further illustrated a scenario where selling a lot of 10,000 shares after 18 months would attract long-term capital gains (LTCG) tax of Rs 1.72 lakh, instead of Rs 3 lakh in STCG if taxed earlier, resulting in a saving of Rs 1.28 lakh.
Zerodha has just launched a SECONDARY demat account featureWe analysed Abhijit’s case. He paid ₹1,60,000 more in taxes last year.
But now with this feature, taxpayers can save lakhs of taxes each year due to FIFO rules
Here’s how it plays out differently with one vs two… pic.twitter.com/DVAQgkL3nc
— Sujit Bangar (@sujit_bangar) August 21, 2025
The feature isn’t free of costs. Each demat carries an annual maintenance charge (AMC) of Rs 300 plus GST, while off-market transfers between demats attract a Rs 15.34 fee per transaction. Moreover, investors lose eligibility for the Basic Services Demat Account (BSDA), which offers reduced charges for holdings below Rs 2 lakh.
Still, for serious traders and investors, the net tax benefits can far outweigh the additional costs, making Zerodha’s secondary demat account a potentially game-changing tool, as noted by Bangar.
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More
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