Table of contents
“Can I transfer shares from one demat to another?” is a question that many active investors may have asked. Yes, it is! Your shares are transferred to a new owner when you sell securities. Having said that, it is possible to move shares across demat accounts if you have more than one.
But before we learn the share transfer procedure, let’s first have a clear idea of what a share transfer is.
Transfer of shares: What is it exactly?
A demat account can be used to move shares to another demat in addition to holding stocks and assets.
When securities are moved from one demat account to another, it is termed as “transferring shares.” Physical share certificates are no longer required in India since shares are stored electronically via a demat account.
Reasons for demat transfer
- Switching depository participants (DPs) or brokers in search of superior services or more affordable brokerage fees.
- Merging assets from many demat accounts into one account to improve the management of one’s portfolio.
- Giving stock to close ones or relatives as a gift or inheritance.
- Move or change residences and transfer shares to a new demat account because of that.
How to transfer shares from one demat account to another?
Manual mode of transfer:
Ask your present broker for a Delivery Instruction Slip (DIS). This slip will include details on the transfer of shares. To effectively transfer the shares, you must complete the transfer information.
The following is the information you must fill out:
Beneficiary broker ID: This is a 16-digit special ID that belongs to the broker or the banks that are transferring money.
ISIN (International Securities Identification Number): Your account’s unique share is identified by this number. Make sure to input this number with the number of shares with the utmost caution.
Transfer method: Off-market transfers are required if you want to conduct an intra-depository transfer (Transfer within the same depository). If not, go with the inter-depository choice (Transfer from one depository to another, for example, NSDL to CDSL)
Online mode of transfer
- Register on the CDSL or NSDL website, depending on the brokerage you are tied up with.
- Select the “Register Online” option.
- Choose the “EASIEST” or “Speed-e” option accordingly.
- Complete the requested fields.
- Copy the information to your depository participant.
The central depository will get a copy from the depository participant. You’ll get the login credentials within a day or two when they validate the information you provided. You may access your broker list by logging in using these credentials. You can now easily move your stocks.
Participants involved in share transfer
Current broker: This is the broker or the depository participant with whom the investor has the existing demat account. The current broker is responsible for verifying the DIS filled by the investor and forwarding it to the depository for processing the transfer request.
Investor: This is the person who owns the shares and wants to transfer them from one demat account to another. The investor has to fill out the DIS with the details of the beneficiary broker, the ISIN of the shares, the quantity of the shares, and the mode of transfer.
New broker: This is the broker or the DP with whom the investor wants to open a new demat account or has already opened one. The new broker will receive the shares from the depository after the transfer is completed. The new broker may charge a fee for opening a new demat account or for accepting the transferred shares.
Depository: This is the entity that holds the electronic records of the shares in the demat accounts. There are two depositories in India: NSDL and CDSL. The depository will execute the share transfer process and update the records of share ownership accordingly.
Charges for transfer of shares from one demat to another
In India, the cost of moving shares between demat accounts might differ based on the brokerage company or the depository party. If an investor wants to terminate their demat account with their present broker, this process may be completed for free.
- There won’t be any taxes due if the shares are transferred to the same individual.
- You will not be responsible for taxes if you transfer shares into another person’s account and use a gift deed; otherwise, you will need to explain why the transactions were made.
- Any income received as a result of the transfer can be recognised as a capital gain, which is taxable income.
In India, there are two ways to transfer shares between demat accounts: manually and online. Online transfers are more convenient and quicker to do than manual transfers, which need physical papers and take longer to execute. It is vital for investors to comprehend the procedures, parties involved, and tax implications related to share transfers in order to guarantee a seamless and trouble-free demat transfer.
Transferring shares from one demat account to another incurs certain costs to be paid to brokers. This is called a share transfer fee. The fee may vary from one broker to another.
Stamp duty is payable on the transfer of shares. It is charged at 25 paise for every ₹100, or 0.25% of the share value transferred. So, if shares worth ₹1,00,000 are transferred, the stamp duty will be ₹250.
Yes, a father can transfer shares to his son. He can either transfer them as per the usual process or gift them to his son.
In normal circumstances, transferring shares online may not take more than 3-4 hours. The offline process may take longer, from a few days to weeks. The duration for transfer depends on whether it is within the same depository or between two depositories.
Yes, transferring shares will not attract capital gains tax. However, selling the shares after receiving them through a transfer will be subject to capital gain taxes.