How to Transfer Shares From One Demat Account to Another?

A share transfer is the process of moving shares from one demat account to another. It requires depository participants to make this process hassle-free. Let's understand the concept of Share Transfer and its process in more depth.

Key Takeaways:

• Shares can be transferred between demat accounts through off-market transfers or on-market transactions.
• Transfers can be initiated online through e-DIS or offline using a Delivery Instruction Slip (DIS).
• Share transfers may involve DP charges, and tax implications vary depending on whether the shares are gifted, sold, or moved between your own accounts.

How to Transfer Shares from One Demat Account to Another?

You can transfer shares between Demat accounts for your own holdings or to another person's account. The transfer process depends on whether the accounts are with the same depository or different depositories.

Transfer Between Your Own Demat Accounts

This is commonly done when changing brokers or consolidating investments.

• Intra-Depository Transfer: Both Demat accounts are with the same depository (CDSL to CDSL or NSDL to NSDL).
• Inter-Depository Transfer: The Demat accounts are held with different depositories (e.g., CDSL to NSDL or NSDL to CDSL).

These transfers can be completed either by submitting a Delivery Instruction Slip (DIS) or through online facilities such as CDSL EASIEST and NSDL SPEED-e, if available with your broker.

Transfer to Another Person's Demat Account

Shares can also be transferred to someone else's Demat account for various reasons, such as:

• Gift Transfer: Transferring shares to a family member or another individual as a gift.
• Sale Transfer: Transferring shares to the buyer after completing a private or off-market sale.
• Inheritance or Nominee Transfer: Transferring shares to legal heirs or nominees after the account holder's death.
• Business or Corporate Transfer: Transferring shares due to mergers, restructuring, or other corporate transactions.

For transfers to another person's account, you must provide the recipient's Demat account details, ISIN, number of shares, and complete the required transfer formalities.

Ways to Transfer Shares from One Demat Account to Another

Shares can be transferred from one Demat account to another, either manually or online. The manual method requires submitting a Delivery Instruction Slip (DIS) to your broker, while the online method lets you transfer shares quickly through CDSL's EASIEST or NSDL's SPEED-e platform. There are two main ways to do this: manual and online. Below, the steps are mentioned in detail.

Manual Share Transfer Method

The manual share transfer method involves submitting a Delivery Instruction Slip (DIS) to your existing broker to transfer shares between Demat accounts. 

Step 1: Obtain a Delivery Instruction Slip (DIS)

Request a Delivery Instruction Slip (DIS) from your existing broker. This slip acts as an instruction form for transferring your shares. You will need to provide the following details:

• Beneficiary Broker ID: Enter the unique 16-digit ID of the broker or bank to which you want to transfer your shares.
• International Securities Identification Number (ISIN): Each security has a unique ISIN. Provide the correct ISIN and the number of shares you wish to transfer.
• Mode of Transfer: Select Off-Market Transfer for an intra-depository transfer, and Inter-Depository Transfer for a transfer between different depositories.

Step 2: Submit the DIS

After filling in all the required details, sign the DIS and submit it to your existing broker. The broker will process the request and may charge a fee for the transfer. The charges vary depending on the broker.

Online Share Transfer Method

If your Demat account is with CDSL, you can transfer shares online through Electronic Access to Securities Information and Execution of Secured Transactions (EASIEST). Follow these steps:

Step 1: Visit the CDSL website and log in.

Step 2: Click on Register Online.

Step 3: Select the EASIEST facility.

Step 4: Fill in the required details and complete the registration process.

Step 5: Submit a copy of the registration details to your Depository Participant (DP).

Your DP will forward the details to CDSL for verification. Once the verification is complete, usually within 1–2 working days, you will receive your login credentials. You can then access your account, view the registered brokers, and conveniently and securely transfer your shares online.

Why Do Investors Transfer Shares Between Demat Accounts?

People often transfer shares for different reasons, as mentioned below.

• Organising: Maybe people have two or more accounts and want all their shares in one account, and to keep things simple, they will use a share transfer instead of selling and buying to save capital gains taxes.
• Gifting: People who use the share transfer option to give their shares to their family or friends as a present.
• Selling Privately: Some people agree to sell shares to someone directly (OTC), not through the market and will use the share transfer option.
• Switching Brokers: If you don’t like the bank or broker managing your demat account, and you move to a new one, you can benefit from the share transfer option.
• Family Planning: Like putting shares in your wife’s or child’s name for the future.

Charges for Transferring Shares Between Demat Accounts

Moving shares isn’t always free it’s like paying a small fee to the organisation that shifts your stuff. Here’s what you might pay:

• DP Fee: Your bank or broker charges something like ₹10- ₹50 per transfer or per share type (ISIN). Some charge a flat fee; others charge per share (e.g., ₹0.05 per share).
• No Fee Sometimes: If it’s within the same DP (like two accounts with the same bank), it might be free!
• Extra Costs: If you’re selling or gifting, you may have to pay taxes or stamp duty (a small government fee).

Tax Implication of Share Transfers

Tax is money you might owe the government when you move shares. Here’s how it works in simple words:

• If You Gift Them: Usually, there is no tax for you if the gift is to a family member (like your wife, kids, or parents). But if it’s to a friend or someone else, and the value of the shares exceeds Rs. 50,000, it will be taxed in the hands of the recipient at the applicable slab rates.
• If You Sell Privately: If you make a profit (like you bought shares for ₹100 and sold for ₹150), you might pay tax on that profit. It’s called capital gains tax. If you held shares for more than a year, it’s “long-term” (12.5% tax on profit over ₹1.25 lakh). Less than a year, it’s “short-term” (20% tax).
• Just Moving Your Own Shares: If you’re shifting between your own accounts, there is no tax because you’re not selling or gifting.

Things to Consider Before Transferring Shares

Before you move your shares, think about these:

• Why Are You Doing It? Make sure you know why, like gifting or organising,g so you don’t mess up.
• Correct Details: Double-check the new Demat account number. If it’s wrong, your shares could go to someone else by mistake!
• Time: It takes 1-2 days, so don’t expect it instantly.
• Charges: Ask how much you’ll pay so you’re not surprised.
• Rules: If gifting or selling, there may be government rules or paperwork (like a gift deed). Check with your DP or a helper (like an accountant).
• Locked Shares: If your shares are locked (like in a pledge for a loan), you can’t move them until they’re free.

Conclusion

Transferring shares between Demat accounts is a simple process when you have the correct account details and follow the required steps. Whether you're switching brokers, consolidating investments, gifting shares, or transferring them to a family member, understanding the process, fees, and tax implications can help ensure a smooth, hassle-free transfer.