Transfer Shares From One Demat Account to Another
- 20 Sept 2024
- By: BlinkX Research Team
Open Demat Account
Transferring shares involves moving securities from one Demat account to another, whether within the same depository or to a different one. This is a key step when changing brokers or consolidating investments. To start the transfer, the account holder must use a Delivery Instruction Slip (DIS) or submit an electronic request through their depository participant. Proper execution ensures that the share ownership is correctly updated in the new account. Following the correct procedures is important to prevent any delays or issues. This blog discusses how to transfer Demat account shares and describes the steps in detail.
How to Transfer Shares from One Demat Account to Another?
Investors can learn how to transfer shares from one Demat to another online by understanding the basic steps. There are two primary methods for transferring shares between Demat accounts in India: online and manual (offline).
Online Method | Manual Method |
| Step 1: Visit the websites of CDSL or NSDL and choose the "register online" option. | Step 1: The first step of the manual transfer process involves obtaining a broker's delivery instruction slip (DIS). |
| Step 2: Select the Electronic Access to Securities Information and Execution of Secured Transaction (EASIEST) option. | Step 2: Fill the form with details like the DP name, ISIN number (a unique identifier for financial securities), target client ID, and the chosen transfer mode (inter-depository or intra-depository). |
| Step 3: Fill out the form provided—by entering in details like your BO ID (Beneficiary Owner ID), DP ID (Depository Participant ID), phone number, and email—print it, and submit it to the depository participant. | Step 3: Submit the DIS-filled DIS form to the broker. |
| Step 4: The DP will verify the form and send a password to your registered email address. Use this password to log in to your account and initiate the transfer of shares. The transfer generally takes about 3-5 days to complete. | Step 4: After submitting the filled DIS slip to the broker, you pay the nominal fee, and the transfer typically takes 3 to 5 days to complete. |
Table of Content
- How to Transfer Shares from One Demat Account to Another?
- Who are the Participants While Transferring Shares from One Demat Account to Another?
- Things to Know Before Transferring Shares
- What are the Tax Implications of Transferring Shares?
Who are the Participants While Transferring Shares from One Demat Account to Another?
Transferring shares from one Demat account to another involves the following participants:
- Current Broker
- Investor
- New Broker
- Depository
NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited) are the two depositories authorised to hold the shares of account holders in India. When shares are transferred from one Demat account to another, it depends on whether both accounts are with the same depository or not.
Things to Know Before Transferring Shares
The integral players involved in the process are the investor, the existing broker (existing DP), the new broker (new DP), and the depository i.e. the NSDL, and CDSL. It's known as an intra-depository transfer when both Demat accounts are registered under the same depository.
Conversely, if the brokers are registered with different depositories—the transfer of shares is between different depositories. It results in an inter-depository transfer. The charges for the transfer of shares from one Demat to another may differ. It depends whether it is an intra-depository transfer or an inter-depository transfer.
What are the Tax Implications of Transferring Shares?
There is no tax imposed when there is a share transfer from one Demat to another as there is no transfer of ownership. Any income earned from this transfer will be considered short- or long-term capital gains.
When this income is held for 12 months or more, it is treated as a long-term capital gain and is taxed at 10%. If the holding period is less than 12 months, it is treated as short-term capital gains, and a 15% tax is imposed. If the long-term capital gain exceeds Rs. 10,00,000, it will be exempt from capital gains tax. Transferring shares between your own accounts does not affect your tax obligations.
When you transfer shares to another person's Demat account, you are not subject to tax obligations if the transfer is a gift deed. Under Section 47 of the Gift Tax Act, the transfer of shares is not subject to taxes.
Under Section 56(2) of the Income Tax Act, shares transferred to another person are taxable. The recipient must pay the taxes if the fair market value of the assets is more than Rs. 50,000.
Conclusion
Transferring shares between Demat accounts has become simpler with the advent of online methods. Investors can now request transfers conveniently from anywhere, using secure online platforms. A reliable stock market app like BlinkX offers a seamless experience for managing these transfers, ensuring efficiency and security in every transaction. Understanding the process and associated charges ensures a smooth transfer experience whether you opt for the manual or online method. Take advantage of the flexibility offered by the digital age by easily transferring shares between Demat accounts.
