How to Transfer Shares from One Demat Account to Another
This article talks about transferring shares from one demat account to another. Details about everything an investor should know about share transfer and how to transfer shares in a hassle-free manner has been included in this piece.
Do you have a demat account? Opening a demat account is easy, but people often struggle with transferring shares from one demat account to another demat account. In such a scenario, with the right broker and adequate information, it can be an easy and hassle-free process.
Types of Share Transfers
There are two national depositories in India authorized to hold the shares of the account holders are:
- National Securities Depository Limited (NSDL)
- Central Depository Services Limited (CDSL)
The transfer mode of the shares depends on the depository with which your broker is associated. There are two types of transfers based on the two national depositories in India (NSDL and CDSL).
Intra-depository transfer: When the transfer is within a depository itself. For example, if the existing and the new brokers are both connected to the same depository, there will be an intra-depository transfer of shares.
Inter-depository Transfer: When the transfer is from one depository to another. For example, if both the existing and new brokers are connected to different depositories, an inter-depository transfer of the shares will take place.
Reasons for Transferring Shares
Situations might arise such that you might need to transfer some shares from one account to another. The most common reasons for transferring shares are:
- To haveaccounts with different purposes: You might want to transfer the shares into different accounts, such as for long-term plans like retirement plans, education or marriage of children etc.
- Consolidate accounts: Suppose, you have multiple demat accounts, you can choose to consolidate all of the existing demat accounts to one. Here also a transfer of shares will be required from the existing accounts to the new account.
- Switch broker: You might want to change your current broker to avail reduced brokerage fees offered by another broker.
- Better Services: You might want to change your broker to avail better services offered by another broker.
The Share Transfer Process
There are two methods to transfer shares from one demat account to the other - either manually (offline) or online.
In case of manual/ offline transfer, you will have to procure the Delivery Instruction Slip (DIS) from your broker. The mandatory fields in the DIS have to be carefully filled-in to transfer the shares. For manual/offline transfer, the following process needs to be followed:
- To transfer shares manually, you should fill up the following details very carefully in the Delivery Instruction Slip (DIS) provided by your broker.
- The ISIN Number- ISIN (International Securities Identification Number) is a 12-digit code required to identify securities. The shares will be transferred based on the ISIN number. Hence it would be best if you double-check the ISIN Number mentioned in the DIS.
Also Read: How to Know Your Demat Account Number?
- The Target Client ID- It is a 16-character code that includes the ID of the client and the Depository Participant (DP).
- Mode of Selection -Here, the choice of the transfer method is made, and it is essential to be very cautious while choosing the option. For an intra-depository transfer, ‘OFF-MARKET transfer’ has to be selected, and for inter-depository transfer, then the ‘inter-depository’ should be selected.
- The duly signed and filled-in DIS slip must be submitted to the account holder’s existing broker. While signing the DIS, your signature should be the same as in the case of opening the demat account earlier with your existing broker.
- Submit the DIS to the existing brokerage firm and collect the acknowledgement receipt for the DIS slip from the broker.
Total Transfer Time: It roughly takes about 3-5 business days for the existing broker to transfer the required shares from the old demat account and the new broker to receive the shares in the new account. The current broker may charge some fees for this procedure, and these rates usually vary from broker to broker. But, in case of closing the demat account, the broker does not charge any fees.
2.Online Transfer of Shares
An online share transfer can be done easily by getting registered at CDSL or NSDL websites. CDSL’s feature called EASIEST, and NSDL's feature called "Speed-e" facility helps you to transfer shares online. For online transfer, the following process needs to be undertaken:
- Login to the CDSL or NSDL websites and click on the "Register Online" link.
- Choose EASIEST for CDSL or Speed-e register for NSDL
- Then the form has to be filled in with all the needed details.
- After the form is filled in, the 'Print Form' option has to be selected, and the printed form should be sent to the account holder's DP (Depository Participant).
- The DP will send this form to the central depository, which will verify all your credentials. After the verification process is over, you will get all the login details in your email within a couple of days.
- Finally, the account holder can log in and begin transferring the required shares using the provided password.
Total Transfer Time: Once the account has been successfully added, after 24 hours, one can transfer securities from the old Demat account to the new one.
Also Read: What Is Dematerialisation of Securities?
Tax Implications on Transfer of Shares:
- When a person transfers shares from his one demat account to the other, there is no additional tax liability.
- The capital gain tax shall be counted from the date of purchase of the stock and not affected by the transfer date.
- If transferring shares to the account of other persons, no additional tax liability is incurred if the transfer is a gift deed and within the permissible limit.
- You are liable for capital gain tax in case you transfer the shares initially received via a demat transfer.
- Transfer of shares from one Demat account to another can be done very easily with adequate information.
- Both Offline/Manual or Online transfer of shares can be done.
- Transfer of shares does not amount to a change of beneficial ownership and capital gains on transfer.
- The broker may charge some fee for processing the transfer request, but no fee can be charged if the old account is being closed.
- The ownership remains the same on transferring shares from one demat account to another hence no transaction and as a result there are no tax implications.
Also Read: How to Transfer Money from Demat Account to Bank Account?
Share Market Knowledge Centre
- Demat account
- Share market
- Trading account
- Online share trading
- Intraday trading
- Futures trading
- Commodities trading
- Currency trading
Lowest Brokerage Charges in India for Demat Account
If you are planning to start trading in shares, then you would need to open a Demat account and trading account with a stockbroker. The stock market is a highly volatile place, and earning profits can be a challenge. In such a landscape, looking for a trading account with the lowest brokerage charges can help bring down the breakeven point and offer a better opportunity to earn profits.
Why is Discount Broking Popular in India?
You may be aware of the saying “a penny saved is a penny earned”, and this saying can be understood by knowing the difference between traditional Demat account and discount brokers.
The concept of zero brokerage in India is set to take the world of investments by storm, and as more and more investors learn of its benefits, the more they seek to get a zero brokerage trading account instead of a traditional online Demat account to save on the brokerage fee.
Use of a Demat Account
A demat account is a common term heard among investors in the capital market; it is what facilitates easy trading in stocks. As investments in the capital markets begin, the various demat account uses are revealed to the account holder. A demat account acts as a repository that holds and manages your stocks. Once you open a demat account, you can use it to hold your shares and securities in electronic format. Having a demat account online enhances convenience while investing in the stock market.
Frequently Asked Questions
Yes, it is possible. You can submit an account closure request to your DP in the prescribed form. The DP will transfer all the securities lying in the account, as per the instruction, and close the demat account.
The broker may charge some fee for processing the transfer request, but no fee can be charged if the old account is being closed.
Shares can be transferred to the different Demat accounts of the same individual with no added tax liability. Also, if transferring shares in the account of other persons, no additional tax liability is incurred if the transfer is a gift deed and within the permissible limit. But, if you transfer the shares received via a Demat transfer, you will have to pay for the capital gain tax.
Yes, you can link your bank account and Demat account. To link, you need to follow these steps:
- Visit the website of the bank and fill in the details.
- An additional proof of secondary bank account is required. A cancelled cheque, a bank passbook statement/ a self-attested bank statement can be submitted as proof documents.
Yes, it is possible. The process of trading through a demat account is similar to making transactions through a bank account. The only point of difference is that you transfer shares through the demat account instead of money.
All shares can be transferred either manually or online.