Opening a Demat Account for Your Child
A child under 18 can hold shares in their own Demat account, but a parent or court-appointed guardian opens and operates it. It is mainly for holding shares the child receives — by IPO allotment, gift, inheritance or corporate action — and later selling them. There's no intraday, F&O or margin trading. SEBI's FAQ bars buying on the exchange in a minor's name directly; our team can confirm exactly what's supported before you rely on it.
At a Glance
| Item | Rule |
|---|---|
| Who the account belongs to | The child (under 18). Shares are held in the child's name. |
| Who opens and operates it | The guardian: father, or mother if the father is absent; otherwise a court-appointed guardian. |
| Who signs | Only the guardian, on every form and instruction. |
| Joint holders | Not allowed. A minor cannot be a joint holder in any Demat account. |
| Main use | Holding shares received by IPO allotment, gift, family transfer, inheritance, bonus/split, and selling them later. |
| Segments | Equity cash (delivery) only. No intraday, F&O, currency or commodity. |
| Ends | At 18 — the account must be converted to (or replaced by) a regular account with the new adult's own KYC. |
Documents You'll Need
Both the child and the guardian complete KYC separately; PAN is compulsory for both.
| Document | Required | Notes |
|---|---|---|
| Account opening form | Signs it | One form, signed only by the guardian |
| KYC form | Yes | Two separate KYC forms — one for the child, one for the guardian |
| PAN card | Yes | Compulsory for both. If the child has no PAN, apply first via Protean (NSDL) or UTIITSL |
| Identity proof | Aadhaar, passport, driving licence or voter ID | |
| Address proof | Aadhaar, passport, utility bill, ration card, registered lease/sale deed | |
| Birth certificate | — | Proves the child's age and the parent's relationship |
| Photograph | Yes | Recent passport size, for both child and guardian |
| Bank account proof | Yes | We'll ask for the guardian's bank details; mutual funds need a bank account in the child's name for payouts |
| Court order | Only if court-appointed | Not needed for a natural parent |
How to Open It
The process varies by channel — online, by courier or at a branch — so step 2 confirms that first.
- 1
Get the child's PAN
Apply online through Protean (NSDL) or UTIITSL using the birth certificate; allow a couple of weeks.
- 2
Contact our team
Call or WhatsApp us, or visit our Raipur office, for the minor account opening kit and the applicable charges.
- 3
Open a bank account in the child's name
A minor bank account operated by the guardian, so payouts can go to the child.
- 4
Fill the forms
One account opening form plus two KYC forms (child and guardian). The guardian signs everywhere; the child does not sign.
- 5
Attach self-attested copies
Every document in the checklist above, and the court order if the guardian is court-appointed.
- 6
Complete verification
In-person or video verification of the guardian, with original documents at hand.
- 7
Submit and wait for activation
Typically 3–5 working days after documents are verified.
- 8
Record the account details
Note the BO/DP ID (16 digits) and client code; use them to receive IPO allotments and gifted shares.
- 9
Move shares in
Family members gift shares with an off-market transfer (delivery instruction slip or online), reason "Gift".
What Can and Cannot Be Done
The account is for receiving, holding and selling; anything speculative, leveraged or done by the child directly is barred.
| Activity | Allowed? |
|---|---|
| Hold shares, ETFs, bonds in Demat | Yes |
| Receive shares as a gift or family transfer (off-market) | Yes |
| Receive inherited shares (transmission) | Yes |
| Receive bonus, split, dividends and other corporate actions | Yes |
| Apply in IPOs | Yes |
| Tender in buybacks or open offers | Yes |
| Sell shares obtained in the ways above | Yes, via the guardian |
| Invest in mutual funds, including SIPs | Yes |
| Buy shares on the exchange (delivery) | Confirm with our team |
| Intraday trading | No |
| Futures & options | No |
| Currency and commodity derivatives | No |
| Margin trading (MTF), pledge for margin, loan against shares | No |
| Offer for Sale (OFS) bids | No |
| Child places orders or signs instructions | No — the guardian operates the account |
| Minor as joint holder in any Demat account | No |
Money, Tax and Bank Rules
Income earned in the child's account is taxed in the parent's hands until the child turns 18.
Clubbing of income
Dividends and capital gains are added to the income of the parent who earns more (Income-tax Act, section 64(1A)). The parent may claim an exemption of up to ₹1,500 per child per year (section 10(32)).
Gifts
Shares or money gifted to the child by a parent or other relative are not taxed as income of the child; keep a record of each gift (date, donor, shares) for later capital-gains cost.
Mutual fund payments
Since 15 June 2023, investments can be paid from the bank account of the minor, the parent/guardian, or a joint account of both.
Mutual fund payouts
All redemption money is credited only to the child's verified bank account — this is why opening a bank account in the child's name first is worth doing.
Sale proceeds from shares
Credited to the bank account linked to the minor's trading account; confirm with our team whether that must be the child's own account.
This is general information, not tax advice; check your specific case with a chartered accountant.
At 18, or If the Guardian Dies
When the child turns 18
- SEBI allows the same account to continue once the new adult confirms the holdings and completes full account-opening formalities.
- Some brokers instead close the minor account and open a regular one, removing the guardian's details and adding the new holder's — our team will confirm which route applies.
- Mutual funds: submit the minor-to-major (MAM) change-of-status form with fresh KYC and a cancelled cheque of the new adult's bank account; SIPs and other standing instructions are suspended from the 18th birthday until this is done.
- From the 18th birthday, income is taxed in the child's own name, not the parent's.
If the guardian dies
The account is frozen until a new legal guardian submits fresh KYC, the death certificate and the court order appointing them.
Questions Our Team Will Confirm With You
A few details depend on current policy and the exact account setup — ask us these when you get in touch.
- Can the guardian buy shares (delivery) in the minor's account, or only sell what the child received?
- Is opening online, by courier, or only at a branch?
- Account opening fee and annual maintenance charge (AMC) for a minor account
- Must the linked bank account be in the child's name?
- How are IPO applications made — from the minor's account or the guardian's?
- At 18: convert the same account, or close and open a new one?
- Can a nominee be added to the minor's account?
Risk Disclosure
- Investment in securities market are subject to market risks, read all the related documents carefully before investing.
- Mutual Fund investments are subject to market risks. Read all scheme related documents carefully.
- Past performance is not indicative of future returns.
- Investments and trading involve risk of loss. No return or profit is guaranteed.
- Derivatives are leveraged products and involve significant risk.