Are you a Zerodha user? Paying high taxes on your investments? Or do you panic-sell during market crashes and regret it later?
If yes, Zerodha’s Secondary Demat Account could be your smartest investment hack in 2025! It’s 100% free, completely online, and needs only one thing — your Aadhaar must be linked to your mobile number.
In this blog, we’ll explain everything you need to know about this trending investment tool — its benefits, how to open it, share transfer steps, charges, and some useful FAQs.
What is Zerodha Secondary Demat Account?
A secondary demat account is an extra demat account under your existing Zerodha login. It helps you separate long-term investments from short-term trades, making your portfolio more organized and helping you save taxes smartly using the FIFO (First In First Out) rule.
Top Benefits of Zerodha Secondary Demat Account
1. Smart Tax Saving with FIFO Rule
According to the Income Tax Department, when you sell shares, FIFO is applied — the shares you bought first are considered sold first. This can increase your short-term capital gains tax.
But with a secondary account, you can transfer long-term shares there, so FIFO applies separately for each account. This reduces unnecessary tax and keeps your long-term holdings safe.
Example:
- Jan 2024: Bought 100 shares of ABC Ltd @ ₹100 (long-term)
- Jun 2024: Bought 100 more @ ₹150 (short-term)
- Jul 2024: Sold 100 shares @ ₹180
👉 Without secondary account: FIFO applies, Jan shares sold = ₹8,000 short-term profit = higher tax
👉 With secondary account: Transfer Jan shares to secondary, sell June shares = ₹3,000 short-term profit = lower tax
Note: Always consult a CA or tax advisor before making tax-related decisions. Rules may change.
2. Better Portfolio Discipline
Shares in your secondary demat don’t show up in the Kite app, only in Console. This helps you mentally separate long-term and short-term investments, which experts say is great for investment discipline in 2025.
3. Avoid Panic Selling – 24-Hour Cooling Period
Selling shares from the secondary demat account isn’t instant. First, you need to transfer them to the primary account, which takes 24 hours. This delay acts as a cooling period, preventing impulsive decisions during market crashes.
Compared to other brokers, Zerodha offers better control and tax reports — all under one login.
How to Open a Secondary Demat Account in Zerodha (Step-by-Step Guide)
If your Aadhaar is linked with mobile, your secondary account will be ready in 72 working hours.
You’ll get an email confirmation from Zerodha, and the account will appear on your Console. A separate TPIN is generated (check email or generate using BO ID).
From Kite App:
- Tap on User ID > Go to Profile
- Click Manage Account > Demat > Secondary > Continue
- Enter nominee details
- Confirm undertaking > Click Continue
- Complete IPV (In-person verification)
- Click Sign Now > Enter Aadhaar > Get OTP > Verify OTP
From Kite Web:
- Login to Kite > Click on User ID
- Go to Console > Account > Demat > Secondary > Continue
- Enter nominee info > Confirm undertaking > Continue
- Complete IPV
- Aadhaar sign-in via OTP
How to Transfer Shares Between Primary and Secondary Demat
- Transfers are off-market, no capital gains tax is triggered.
- Buy average is auto-updated in your portfolio.
Steps:
- Go to Portfolio > Choose the stock
- Select Transfer to Secondary Demat Account
- Enter quantity > Click Continue
- Authorize using CDSL TPIN and OTP
To add a new beneficiary:
- CDSL sends an email (between 3–5 PM)
- Click link > Enter PAN & Demat ID > Generate OTP > Accept
- Confirm transfer via OTP (by 8 PM same day)
✅ Transfer is completed within 24 hours.
🔔 Note: Mutual funds cannot be transferred yet (feature coming soon). Shares in the secondary account can’t be used as margin or collateral, and you must transfer them back to primary before selling.
Charges for Secondary Demat Account?
| Type | Charges |
|---|---|
| Annual Maintenance (AMC) | ₹300 + 18% GST per account |
| Off-Market Transfer | ₹13 + 18% GST per transfer (₹15.34 approx) |
Example: Transfer 100 shares to secondary and 50 back = ₹30.68 total charge.
Note : ❌ No BSDA benefit on secondary account. AMC (Account Maintenance Charge) is charged separately for both accounts.
Final Thoughts: Make Smarter Investments in 2025
The Zerodha Secondary Demat Account is a powerful tool for:
✅ Saving taxes
✅ Organizing your portfolio
✅ Avoiding panic during market volatility
If you haven’t opened one yet, now is the time!