Sharekhan Blog

How to Transfer Shares From One Demat to Another Online?

  • Feb 26, 2024

Yes! You are effectively transfer your shares to a new buyer when you sell stocks. Additionally, you can move shares between your demat accounts with ease if you have more than one.

Share transfers between demat accounts are a frequent occurrence. Investors must understand how to transfer shares, regardless of whether they have consolidated their interests, changed brokers, or given shares as gifts to family members. So, let’s discuss the steps to transfer shares from one demat to another online.

What is a Transfer of Shares?

Shares transfer implies the action of taking securities from one demat account to another. In India, shares are stored electronically by the dematerialization (demat) of shares, so no paper share certificates are involved.

What are the Reasons for Transferring Shares?

Transferring shares from one demat account to another could be done for a variety of reasons. Some of the common reasons are:

  • Change of Brokers: You might need to move your shares from your previous demat account to the new one if you decide to move to a new broker since you are not content with your present one.
  • Consolidation: Combining all of your demat accounts into one may make managing your shares simpler if you have several.
  • Family Transfers: Shares must be moved from one demat account to another in the event of an inheritance or gifting of shares within the family.

What are The Tax Implications of Transferring Shares?

It is deemed a non-taxable event when shares are transferred from one demat account to another. However, there may be tax repercussions if the shares are moved to another person's demat account. Additionally, without consideration, transfers should be regarded as gifts and subject to gift tax under the Income Tax Act of 1961. Before completing such a transfer, both the transferor and the transferee should obtain the necessary legal counsel.

How to Transfer Shares from One Demat to Another?

Below is a summary of the process for moving shares across Demat accounts.

Step 1: Complete the Delivery Instruction Slip (DIS) and send it to your present broker as soon as possible.

Step 2: The broker sends the depository the DIS form.

Step 3: The Depository participant will move your current shares directly to the Demat account.

Step 4: After all the stocks or shares have been transferred, the transferred shares or stocks will show up in the trader's latest Demat account.

Manual Transfer of Shares

Here is the process of transfer of shares from one Demat account to another.

If an investor opens an account with any of the stockbrokers, a delivery instruction slip or a welcome kit will be provided to the investor. During offline application the investor or trader has to fill the form.

  1. Target Client ID: It is a sixteen-digit identification number that is assigned to the investor. It is the broker ID, also referred to as Beneficiary Owner ID.
  2. ISIN: Internationally Standardized Securities Identification Number, commonly denoted as ISIN and consists of 12 digits. It helps in locating securities like stocks, equities, notes, bonds, funds, etc. Information regarding the shares and quantity should be provided.
  3. DP Name: The above name should be mentioned of the stockbroker or Depository Participant.
  4. 4. Inter Depository: This blank must be completed when the investor wants to transfer the shares from one depository to another.
  5. Off Market: This space is filled up to transfer shares within the same depository.

The last steps are as follows once all the necessary data has been entered, and the investor has signed the DIS:

  1. The investor's signing and submission of the DIS to the present broker.
  2. After receiving the DIS from the broker, the investor needs to accept the appropriate acceptance receipt.
  3. Following this, it will take a few days for the broker to move the shares to the investor's Demat account with the new brokerage.

Participants in the Transfer of Shares

When transferring shares across demat accounts, the following parties are the main players:

Transferor: The shareholder in place at the moment who will initiate the transfer.

Transferee: The individual who will acquire the shares as the new owner.

Depository Participants (DPs): The organizations that have registered with the depository (NSDL or CDSL), which provide services related to demat accounts.

Depositories: In dematerialized form, your securities are held and managed by NSDL and CDSL, respectively.

Also Read: Dematerilization & Rematerialization

The Bottom Line

The process of transferring shares across demat accounts is easy to understand, but it's crucial to follow every step precisely. Following these instructions and comprehending the fundamentals of Demat accounts will enable you to transfer your shares without difficulty.

Team Sharekhan
by Team Sharekhan

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