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How Securities are Transmitted on Death of Demat Account Holder?

  • Feb 26, 2024

Alright, so let's imagine that the owner of a demat account has designated a candidate. But the question is how to transfer securities after the death of a demat account holder?

So, let’s get this in the below post.

Transfer Securities on Death of Demat Account Holder if Nominee Exists

The process of transferring securities to the nominee is very simple. The steps to transfer are as follows: -

  1. In the event that you are the nominee, you must first complete a Transmission Request Form (TRF). However, you will get this form from the person’s demat account holder's depository participant.
  2. Once the form is completed, it must be submitted with a properly notarized copy of the demat account holder's death certificate.
  3. The dead account holder's DP or died DP will typically also ask you to provide documentation proving your identity and residence, as well as proof of your relationship to the holder.
  4. The DP will review the application after obtaining the necessary paperwork, and if satisfied, they will move the shares to your demat account.

Unfortunately, online share transfers are not allowed in the event of the account holder's death. To move shares from one demat account to another, you will need to physically visit a branch office of the depository participant.

Also Read: What is Demat Account

Transfer of Securities in Case of Joint Account

The second demat account holder acquires ownership of the account's assets in the event that the Demat account is a joint account. The following records are necessary in this instance:

  • The Transmission Request Form is the identical document that was needed in the prior instance. In contrast to the annexure needed in the event of a nominee, most DPs for joint accounts often contain a separate annexure. The appropriate annexure, as sent by your DP, must be filled out.
  • Death certified copy officially attested by a notary public or a gazette officer.
  • The joint account holders' Client Master Report is necessary.

Single Account Owner with No Nominee

This situation is a little trickier than the others. To move assets from one demat account to another, the DP requires the following paperwork.

  • Transmission Request Form: As with the other two situations, this one also calls for a properly completed transmission request form.
  • Death Certificate: The death certificate must be provided in copy form and attested by a gazette officer or notary public.
  • A Letter of Indemnification: It is a formal declaration that the individual listed within is the legitimate heir of the deceased.
  • An affidavit: It is a declaration on non-judicial stamp paper stating the applicant is the deceased person's legitimate successor.
  • A Family Settlement Deed: It may outline the allocation of the shares among the various surviving legal heirs.Know More about Transfer of Shares

Taxes on Transmission of Securities

There is no tax charged when securities are transferred due to inheritance and transmission in India. At the same time, any profits earned from the sale of these inherited securities is subject to capital gains tax in accordance with the holding period and type of securities.

Such inherited securities being held for more than a year would be subject to long-term capital gains tax. And on the other hand, if they are sold within a year of inheritance long-term capital gains tax will apply.

Furthermore, any dividend income earned from these inherited securities is also taxable in the manner prevailing for the income tax slab.

Timeframe for Transmission

The transmission process generally takes around 15-30 days to complete, which wholly depends on the time taken for verification and transfer of securities.

In case the legal heirs face any issues or delays, they can contact the DP or depository for assistance. It is important to note that while different DPs may follow some minor variations in the process, the general procedure remains the same.

The Bottom Line

The death of demat account holder initiates the process of transfer, where the DP is informed of their demise and documents are submitted. After that, the DP subsequently verifies those documents and transfers the securities to eithera joint/individual account owned by the deceased’s legal heirs. However, to make the overall process of transferring securities easy ensure to have a nominee in place.

Team Sharekhan
by Team Sharekhan

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