How to Transfer Shares From One Demat Account to Another

Transferring Shares Between Demat Accounts: A Comprehensive Guide

Transferring shares between demat accounts is a common practice among investors. Whether it’s seeking better services or lower brokerage charges by switching brokers, consolidating investments for streamlined portfolio management, or transferring shares as gifts or inheritances to family members, there are several reasons behind the transfer. In this guide, we will walk you through the step-by-step process to transfer your shares, ensuring a smooth transition between demat accounts.

Different Ways to Transfer Shares from One Demat Account to Another

There are two ways through which you can transfer shares from one demat account to another:

1. Offline Method

To transfer shares from one demat account to another via offline mode, follow these steps:

Step 1: Obtain a Delivery Instruction Slip (DIS) from your current stockbroker.

The DIS contains all the necessary details needed for the transfer.

Step 2: Fill in the DIS provided by your broker with the following details:

• ISIN (International Securities Identification Number): This 12-digit code confirms the authenticity of shares. Make sure to verify it.
• Quantity of shares
• DP ID (Depository Participant ID) and Client ID: This 16-digit code combines your DP ID and client ID.
• Choose the off-market transfer mode if it is an intra-depository transfer. For other transfers, select the inter-depository option.

Step 3: Sign the document and submit it to your current broker.

Your current broker may charge a small fee for the transfer, which can vary depending on the broker.

Step 4: Collect the acknowledgement slip.

After completing these steps, your shares will be transferred to your new demat account within 3-5 days.

2. Online Method

To transfer shares from one demat account to another via online mode, follow these steps:

Step 1: Sign up for either the ‘easiest’ or ‘speed-e’ facility on the CDSL or NSDL website.

Step 2: Fill in all the necessary details on the form and submit it.

Step 3: Provide a copy of the form to your depository participant.

Your depository participant will then send it to the central depository.

Step 4: Your information will be verified by the relevant authorities.

You will receive your login details within 1 to 2 days.

Step 5: Once logged in, you can transfer stocks from your demat account whenever you want.

It’s important to note that when transferring shares from Groww to other brokers, requests received after 3:30 pm that require same-day execution will not be processed. Requests received after 3:30 pm and set for execution on the next working day will be processed on that day. No requests will be processed on Saturdays or CDSL holidays.

Participants in the Transfer of Shares

When transferring shares from one demat account to another, it’s important to understand the key participants involved in the process. The main participants are:

• Current owner of the shares who initiates the transfer
• Recipient of the shares, who becomes the new owner after the transfer is completed
• Depository Participants (DPs): Entities registered with depositories like NSDL or CDSL, providing demat account services to investors
• NSDL and CDSL: The depositories responsible for holding and maintaining securities in dematerialized form

Things to Consider When Transferring Shares

When transferring shares between demat accounts, it’s important to consider the following points:

• Pick a trustworthy and reputed DP for a new demat account
• Verify details like client ID, beneficiary account numbers, DP ID, and ISIN
• Keep records of the share certificates, transfer deeds, and related documents
• Monitor the transfer status and reach out to the DPs in case of any delays or issues
• Seek advice from a chartered accountant or tax advisor to understand the tax consequences of the transfer and ensure compliance with reporting requirements

Tax Implications of Share Transfers

Transferring shares from one demat account to another owned by the same person does not incur taxes. However, if you transfer shares to someone else’s demat account, it may lead to tax consequences. Transfers without payment are considered gifts and are taxed under the Income Tax Act 1961. It is wise for both the person transferring and receiving the shares to seek legal advice before making such transfers.

Wrapping Up

By transferring your shares, you can ensure your investment strategy aligns with your financial goals. Now that you have understood the different processes to transfer shares between demat accounts, you can confidently manage your investments with greater flexibility. However, remember to consider the reasons behind this transfer and stay informed about all tax implications.