1. Fewer Risks : Physical shares are subject to loss, damage, and theft risks. It is also susceptible to fraud and manipulation by unscrupulous persons. With a demat account, investors can store all their investments or shares in a safe and secure digital depository.

2. Reduced Transaction Costs : Dealing in physical shares involves additional charges that are difficult to determine in advance. These additional costs may be handling expenses, stamp duty, and other similar outlays. Whereas in the demat account, the only charge payable is the brokerage charge, which is informed in advance.

3. Reduced Transaction Time : Transacting with physical shares involves sending shares to the company or the register to get the shares transferred in the investor’s name. This is a lengthy process, sometimes taking months to get the shares transferred.

4. Nomination Facility : A demat account provides nomination facilities to investors as per the process described by the depository. This will allow investors to appoint a nominee to operate their accounts in their absence.

5. Loan Collateral : Investors can pledge their demat accounts’ securities to secure a loan against securities. The shares held, liquidity, and acceptability will help investors procure loans at low-interest rates.

6. Corporate Activities : If a company held by the investor declares a dividend, the benefits are automatically credited to the beneficiary’s demat account. In addition to this, corporate actions like stock split, bonus issue, or right shares are automatically updated in the demat account of all the company’s shareholders.

7. No TDS : The Central Board of Direct Taxes (CBDT) has granted dispensation from tax deducted at source (TDS) when demat accounts make payments. This also means that no TDS is deducted from the interest received by investors on bonds and securities.