Learn the process of transferring shares from one Demat account to another

The process of opening a Demat account is easy. However, people tend to fall back on 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 methods here.

How to transfer shares from one Demat account to another?

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 yourself of benefits such as a robust trading platform with enhanced security.

Securities management: You may want to categorise shares based on your financial goals such as child’s marriage or retirement planning. Separating for taxation purposes 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:

• National Securities Depository Limited (NSDL)
• Central Depository Services India Limited (CDSL)

Intra or inter-depository share transfers are possible:

• Stocks transferred from one Demat to another within the same depository is called intra-depository transfer
• A transfer from one warehouse to another is called an inter-depository transfer
  

Transfer shares either manually or online

Method 1: Manual/ offline 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.

• ISIN Number: The shares will be transferred based on ISIN numbers. It is a 12-digit code that authenticates shares. Do double check the ISIN number mentioned in the DIS.
• Beneficiary Owner ID/ Target Client ID: It is the 16-digit code which is a combination of DP ID and Client ID.
• Mode Selection: Use predefined reason codes to select the mode - Intra-depository transfer or inter-depository transfer. The intra-depository transfer is the "Off-market transfer'. Choose carefully.

Step 2: Sign the DIS with the same signature you put with your existing broker when opening the Demat account.

Step 3: Submit the DIS to the existing brokerage firm. They will issue you an acknowledgement slip.

Now you can share transfers with national depositories. The shares show up in your new Demat account within 3-5 days.

Online transfer of shares

Follow these steps to understand how to transfer shares from one Demat account to another online:

• Step 1: Online transfer of shares through CDSL's 'Easiest’ facility and NSDL's ‘Speed-e’ facility. Get registered at CDSL or NSDL website.
• For NSDL - Visit this page > New User Registration > Speed-e>Register
• For CSDL - Click here > Register for Easiest > Enter Demat details, OTP, account details (DP ID, Client ID, email id etc.
  
• Step 2: Once the form is filled and submitted to 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, your account will be activated, and you will receive login credentials through email. Now you can log in and transfer shares from one Demat account to another.
  

Additional Read: How to open a Demat account?

Tax implication

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.

If 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.