Have you already opened a Demat account? It’s time to learn how this eases the way you transfer shares from one Demat account to another. In fact, trading through a Demat account is just like making transactions through a bank account. The only difference is that you transfer shares through the Demat account instead of mon understand what is a share transfer.
Key Highlights
It is easy to transfer shares between Demat accounts.
You can transfer shares online or offline/manually.
Ownership doesn’t change if an investor transfers shares to his other Demat account. Hence there are no applicable taxes.ey. Let’s learn how to transfer shares from one Demat account to another. However, let’s first
If an investor transfers shares to a Demat account of another individual, capital gains tax will be applicable. The amount of taxes depends on the holding period.
The broker may charge a fee for handling the transfer request, but if the previous account is closed, no price may be assessed.
Transfer of shares is the process of transferring the ownership of existing shares from the present holder to another individual. An owner of shares usually has the option to sell them at any time to obtain cash or change the composition of his investment portfolio. The two most popular methods of share transfers are the selling and gifting of shares
You may want to transfer shares from one Demat account to another. There may be multiple reasons for doing so. Some of them include the following:
You may have multiple Demat accounts. So, you may want to consolidate all the shares in a single account.
Some investors may want to separate the shares into different accounts. This is good for long-term plans like retirement, children’s education, or marriage.
You may also want to change your existing broker. You can switch to a discount broker to reduce the brokerage charges.
Some individuals may like to opt for a full-service broker to get more comprehensive services like analysis reports and trading tips.
Read more: How to buy mutual funds online without demat account
The procedure for transferring shares between Demat accounts is summarized below.
Step 1: TThe first step is to fill out the Delivery Instruction Slip (DIS) and submit it to ythe current broker.
Step 2: The broker forwards the DIS form to the depository.
Step 3: Your current shares will be transferred to the Demat account by the Depository.
Step 4: The transferred shares will appear in the investor's new Demat account once all the shares have been transferred.
To guarantee a seamless and safe process, numerous parties are involved in the transfer of shares from one Demat account to another. They are:
- Depository Participant (DP)
- Transferor (Seller) and Transferee (Buyer)
- Depository
- Registrar and Transfer Agent (RTA)
- Stock Exchange
There can be two types of share transfers. They are as follows.
Intra-depository transfer: If the transfer is within a depository itself, it’s called an intra-depository transfer.
Inter-depository Transfer: An inter-depository transfer involves transferring shares from one depository to another. All shares can be transferred either manually or online.
Manual Procedure
For the manual procedure, you will have to get the delivery instruction slip (DIS) from your broker. You will have to fill up some mandatory fields in the DIS. They include the following.
Beneficiary owner ID (BO ID): It is the 16-digit ID of the broker. You will have to mention the ID of both the current and new broker.
International securities identification number (ISIN): It is a unique identification number for identifying the shares in a Demat account. This number needs to be mentioned clearly to specify which shares have to be actually transferred.
Mode of transfer: If it is an intra-depository, you must choose the ‘off market transfer’ option. Otherwise, it’ll be an ‘inter-depository transfer’. Once you fill all the fields in the form, you must sign the form. The signature needs to match the one saved in the database of the DP. After this, you need to submit the DIS slip to the current broker. Your broker may levy some charges for the transfer. This amount may vary from one broker to another. However, the broker cannot charge any fees if you close the Demat account.
Online Procedure
Central Depository Services Limited (CDSL) has a feature called EASIEST to help you transfer shares from one Demat account to another online. You need to register yourself on this website to use it. The process involves the steps mentioned below.
- Click on the ‘Register Online’ link
- Select the ‘EASIEST’ option
- Fill in the details
- Take a printout and give it to the DP
- The DP will forward the transfer request to CDSL, which will verify your details. You will get the login credentials in your email within a couple of days.
- Now, you can transfer your shares.
The present stockbroker usually needs 3 to 5 working days to transfer shares from your existing Demat account to the new one. However, this may vary from one broker to another. Generally, online transfer of shares takes place faster than manual transfers.
In addition, if there are weekend holidays, it may take a few more more. The depositories are closed on national holidays. Even some brokers may not work on those days. So, your transfer request gets processed when the depositories reopen on the next working day.
Read more: Demat account opening charges
Shares can be transferred to the different Demat accounts of the same individual or different persons. In case of transfer of shares to the same person, there will be no added tax liability. However, note that the capital gains tax will be calculated for the period from the initial date of purchase of the stock. The transfer date will not affect it.
If you transfer shares to another individual, you will have to mention the reason for the transfer. There will be no extra tax liability if you gift the shares. However, it should not exceed the specified limit. Here, taxes are calculated from the original purchase date. Capital gains tax is applicable if you transfer the shares you have originally received via a transfer. What are you still waiting for? Go ahead and open a Demat account today to enjoy the benefits of online trading.
The present broker may levy a charge for transferring the shares. These charges usually differ from one broker to another.
Investors don’t have to pay any charges if they close a Demat account with the existing broker.
If the investor wants to close the Demat Account, he must return any unused DIS to the broker.
Read more: How to convert physical shares to demat
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FAQ about Transferring Shares from One Demat Account to Another
What are the rules for transfer of shares?
The requirements for transferring shares include using the right paperwork, verifying signatures, and following company-specific limitations. You may have to pay stamp duty in some instances.
What are the documents required for share transfer?
A Demat instruction slip (DIS), a share transfer deed, and the relevant Know Your Customer (KYC) paperwork are the necessary documents for share transfers.
How to transfer shares from one Demat account to another online?
To transfer shares from one Demat account to another online use the 'EASIEST' facility of CDSL or ‘Speed-e’ facility of NSDL on their website. Fill in the required details and send a copy to your DP. After verification the shares will be transferred in a few days.
Can I transfer all shares from one Demat account to another?
Yes, you can transfer all the shares present in a Demat account to another. For this you can initiate a full account transfer. It entails completing the relevant papers and providing the details of both Demat accounts.
Can we transfer Demat holdings from one broker to another?
Yes. You can transfer your Demat holdings from one broker to another either manually or online.
Are there any charges to transfer shares from one Demat account to another?
Yes, the broker may apply some charges for transferring shares from one Demat account to the other. This amount may vary from one broker to another. However, if you are closing your Demat account, the broker will not charge any fees.
Can you consolidate different Demat accounts?
Yes, you may consolidate more than one Demat account by transferring all your holdings into a single account. However, you can use multiple Demat accounts without having to close any of the existing Demat accounts.
How do you legally transfer shares?
Shares can be legally transferred by completing a stock transfer form. You will have to sign it in the presence of witnesses and submit it to the company's registrar or through a Depository Participant (DP).
How can I transfer shares in NSDL online?
You can use the Speed-e facility of NSDL to transfer shares online. Register on the platform and provide the necessary details. The shares will be transferred in a few days after due verification.
Are there any costs for transferring shares?
Yes, transferring shares may incur costs. These include stamp duty and other fees. They usually vary depending on the transfer method and the entities involved.
As an expert in financial markets and investment, I've spent years navigating the intricacies of trading platforms, investment vehicles, and related processes. My extensive experience in the field enables me to provide comprehensive insights into the topic of transferring shares between Demat accounts.
Understanding Share Transfer in Demat Accounts
The article rightly points out that transferring shares between Demat accounts is a straightforward process, much like transactions through a bank account. Let's break down the key concepts mentioned in the article:
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Ownership and Taxes:
- When transferring shares within one's own Demat accounts, ownership doesn't change, and no taxes are applicable.
- However, if an investor transfers shares to another individual, capital gains tax becomes applicable based on the holding period.
-
Reasons for Transfer:
- Investors might transfer shares for various reasons, such as consolidation of multiple Demat accounts, long-term planning, or changing brokers for different services.
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Transfer Procedure:
- The transfer involves filling a Delivery Instruction Slip (DIS) and submitting it to the current broker.
- The broker forwards the DIS to the depository, and the shares are transferred to the new Demat account.
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Parties Involved:
- Various parties, including the Depository Participant (DP), Transferor (Seller), Transferee (Buyer), Depository, Registrar and Transfer Agent (RTA), and Stock Exchange, play roles in ensuring a smooth transfer.
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Types of Transfers:
- Intra-depository transfer occurs within the same depository, while inter-depository transfer involves moving shares between depositories.
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Manual vs. Online Procedure:
- Manual transfers require a filled DIS with details like BO ID, ISIN, and mode of transfer.
- Online transfers can be facilitated through platforms like CDSL's EASIEST, providing a more efficient process.
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Timeframe and Charges:
- The transfer usually takes 3 to 5 working days, with online transfers generally faster.
- Broker charges may apply for handling transfer requests, but closing the Demat account might exempt investors from such fees.
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Tax Implications:
- Transferring shares to the same person incurs no added tax liability, but capital gains tax is calculated based on the original purchase date.
- Gifting shares to another individual may have tax implications, depending on the specified limits.
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Closing Demat Account:
- If an investor decides to close the Demat account, any unused DIS must be returned to the broker.
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FAQs:
- The article addresses common questions related to share transfer, including the rules, required documents, online transfer process, consolidation of accounts, and legal aspects.
In conclusion, understanding the dynamics of share transfer in Demat accounts is crucial for investors looking to optimize their portfolios and navigate the complexities of the financial landscape. Opening a Demat account is the first step towards enjoying the benefits of online trading, and the article provides a comprehensive guide for those looking to transfer shares seamlessly.
