The need to transfer shares
The process of transferring shares
Manual/offline transfer and Online transfer
The process of Demat account opening is easy. However, people tend to fall back on the process of transferring shares from one demat account to another. It can be an easy and effortless process with the right broker and adequate information.
There are two methods (online and offline) to transfer shares from one demat account to another. We will discuss both the methods here.
Reduction in brokerage charges: You may want to reduce brokerage fees by opening a Demat account with a discount broker.
Better services: You may want to switch from your current broker to avail better services such as a robust trading platform with enhanced security.
Securities management: You may want to categorize shares based on your financial goals such as child’s marriage or retirement planning. Separating for taxation purpose can also be a reason. You can also keep separate demat accounts for trading activities and investment portfolios.
Consolidation of holdings: Multiple Demat accounts with different brokers can be consolidated into a single demat account with all the securities. This approach can help you in lowering demat account charges for maintaining idle accounts.
Additional Read: Difference Between Trading Account And Demat Account?
There are two primary depositories in India to hold dematerialised securities in a Demat account for investors -
The National Securities Depository Limited (NSDL)
The Central Depository Services India Limited (CDSL).
Share transfer can be done intra or inter-depository:
Stocks transferred from one Demat to another within the same depository, is called intra-depository transfer.
A transfer from one depository to another, is called an inter-depository transfer.
You need to understand some of the DIS components to complete the offline transfer process.
Step 1: To transfer shares manually, you are required to fill in the following details carefully in the Delivery Information Slip (DIS) provided by your broker.
Step 2: Sign the DIS with the same signature you put with your existing broker at the time of opening the Demat account.
Step 3: Submit the DIS to the existing brokerage firm. They will issue you an acknowledgement slip.
Now the share transfer process can be initiated with national depositories. The shares show up in your new Demat account within 3-5 days.
To understand how to transfer shares from one Demat to another online, the below steps need to be followed -
Step 1: Online transfer of shares can be simply done through CDSL's 'EASIEST' Facility and NSDL's ‘Speed-e’ Facility. Get registered at CDSL or NSDL website.
Step 2: Once the form is filled and submitted at the website, you need to take a printout of the form and submit it to your broker.
Step 3: The broker will further submit the form to the central depository to verify your details.
Step 4: Once the broker verifies your details, the activation of the account will be done and you will be provided login credentials through email. Now you can login and transfer shares from one demat account to another.
Additional Read: How To Open Demat Account?
When a shareholder transfers shares from a Demat to another held in his name, there is no tax liability but the broker can charge a transfer fee.
In case, a shareholder transfers shares to another person, for example, his spouse or children, he has to provide a clear and legitimate reason for doing so. It must be supported by a gift deed to avoid tax liability. Here the capital gain taxes will be applicable.
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