How to Transfer Shares from One Demat Account to Another?

As an investor, you might want to transfer shares from one Demat account to another, as it is common among those who regularly invest. You might need to transfer your shares for various reasons, like opting for a better broker, consolidating shareholdings, or extending shares as gifts to your family members.

Understanding the process of transferring shares results in better investment management and helps you streamline your investment portfolio. In this blog, let us discuss what transferring shares means, the process and other important aspects in detail.           

What is Transfer of Shares from One Demat to Another?

Before understanding the process to transfer shares from one Demat account to another, it is important to know the basics related to share transfers. It is a process when an investor chooses to transfer the shares from one Demat account to another for various reasons.
However, before transferring the Demat account, they must look for extra features offered by the new broker. The transfer of shares from one Demat account to another involves moving securities electronically between two accounts held with depositories like NSDL or CDSL. This process may occur during a change of broker, consolidation of holdings, or gifting of shares.

How to Transfer Shares from One Demat Account to Another?

There can be various reasons that may lead you to transfer shares from one Demat account to another. If you are wondering how to transfer shares from one Demat to another online, follow the step-by-step guide below:

• Step 1: Open the official website of CDSL or NSDL on your browser and choose one of the “Speed-e” or “Easiest” facilities.
• Step 2: Fill out an online registration form and provide the necessary details as instructed to proceed further.
• Step 3: Take a printout of the duly filled form and hand it over to your broker or Depository Participant (DP).
• Step 4: Wait for the verification process of the details to be completed by the central depository.
• Step 5: Upon successful verification, you will receive your login credentials for transferring shares via email. Log in with those credentials and transfer your shares between Demat accounts.

Other Ways to Transfer Shares from One Demat Account To Another

Apart from an online application, you can follow a different way, or rather a traditional way, to transfer your holdings. As a shareholder, transfer shares from one Demat account to another offline using the following guide:

• Step 1: Obtain a Delivery Instruction Slip (DIS) from your broker and fill it out with details. These details include the ID of the target client, the name of the DP, the ISIN, and the transfer type.
• Step 2: After filling out the DIS, sign it and submit it to your broker for processing.
• Step 3: Your broker will forward this DIS to the central depository (NSDL or CDSL) for verification purposes.
• Step 4: Upon successful verification and processing, the transferred shares will be reflected in the Demat account of the transferee.

Participants in the Transfer of  Shares

Now that you know the process to transfer shares from one Demat account to another, take a look at the involved participants in this transfer for a better understanding:

1. DPs: They play a crucial role in completing a successful share transfer between Demat accounts. They act as an intermediary and are usually financial institutions or brokers.
2. Transferee: These are the individuals who receive the share transferred by a particular shareholder. For example, upon transferring shares as a gift to a family member, the member becomes the transferee.
3. Transferor: An individual who decides and initiates a share transfer between Demat accounts. For example, if you hold a share of a certain company and want to transfer your share to a different Demat account, you are the transferor.
4. Depositories: Depositories are central entities like NSDL or CDSL that are responsible for securities in a dematerialised format.

Time Required for Transfer of Shares

When you choose to transfer shares from one Demat account to another, you must learn how much duration it takes to complete the transfer. Depending on the chosen process for share transfer, the timeline varies.
If you apply for a transfer of shares online, your request is considered with priority and fulfilled faster. Whereas, if you opt for the traditional approach or offline application, it might take more time to complete the transfer.
On average, it takes a week to transfer shares from one Demat account to another. Therefore, it is recommended to submit an online share transfer application.

Tax Implications of Transferring Shares

When you transfer shares from one Demat account to another, you become liable for taxes depending on the type of transferee. Here is a detailed breakdown of the types of transferees:

1. Transferring as a Gift: If you transfer shares as a gift to your family members, like your parents, wife, etc., you are not liable for taxes. Upon gifting shares worth more than INR 50,000 to someone outside your family, taxes are applied according to the tax slab.
2. Self-Transfer: If you transfer your owned shares between your accounts, there are no taxation charges.
3. Selling Privately: Upon making a profit by transferring shares at a higher price, it becomes a capital gain. Depending on the holding tenure, you will be taxed as per long-term or short-term capital gain taxes.

Things to Consider When Transferring Shares

If you want to transfer shares from one Demat account to another, keep the following pointers in mind:

1. Choose a Reputed DP: If you are looking for better brokerage services, choose a reputed DP and open your new Demat account. This will help you keep your securities safe and ensure a faster transfer.
2. Double-check Details: Before submitting your application, reconfirm the target client ID, ISIN, DP ID, and beneficiary account details. It will help avert discrepancies during the transfer.
3. Track Progress: Upon submitting your share transfer application, monitor the progress and raise concerns in case of delays to your DP.
4. Consider Tax Implications: Before transferring shares, consult with a tax expert to better understand tax implications. It will also help in complying with the tax filing process.
5. Maintain records: For error-free transfers, keep a proper record of transfer deeds, share certificates and other important documents.

Conclusion

As an investor in shares, you may want to transfer shares from one Demat account to another for your convenience. You can apply it using both online and offline channels. However, an online application process is much faster, and transfer is also expedited against an offline application. Keep tax implications in mind while transferring shares to comply with tax rules.        

FAQ’s

1. Can I transfer shares from one Demat account to another online?

Yes, you can do a share transfer from one Demat account to another online. All you need to do is register with the “Speed-e” or “Easiest” facility and fill out a form. Submit the filled form to your DP, and upon verification, you can complete the share transfer process.

2. Can I transfer stocks from one broker to another?

Yes, it is possible to transfer your stocks between two different Demat accounts of different brokers. You can go for either the offline or online method and use the DIS or official CDSL/ NSDL websites.

3. Can I transfer shares from  NSDL to CDSL?

Yes, similar to a share transfer between two brokers, it is possible to transfer shares between two depositories. You can choose from options like the “Speed-e” facility for an online transfer request. Using a DIS slip, you can raise a transfer request offline.

4. What is the share transfer fee from one Demat account to another?

When transferring shares, depending on the brokers, the fees might vary. Most brokers usually ask for nominal charges to complete your share transfer. Therefore, it is better to get connected with your brokerage firm before transferring your shares.