How to Transfer Shares From One Demat Account to Another
Transferring shares between demat accounts is a common practice among investors. From seeking better services or lower brokerage charges by switching brokers to consolidating investments for streamlined portfolio management, there could be several reasons behind the transfer. Some investors may even transfer shares as gifts or inheritances to family members.
In this guide, you will learn the step-by-step process to transfer your shares, ensuring a smooth transition between demat accounts.
Different Ways to Transfer Shares From One Demat Account to Another
There are 2 ways through which you can transfer shares from one demat to another. These methods are as follows:
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Offline Method
Follow the steps mentioned below to transfer shares from one demat account to another via offline mode:
Step 1: Get a Delivery Instruction Slip (DIS) from your current stockbroker. This slip has all the necessary details needed for the transfer.
Step 2: Fill in the DIS provided by your broker with the following details:
- International Securities Identification Number (ISIN): This 12-digit code confirms the authenticity of shares. Make sure to verify it. Additionally, mention the quantity of shares along with the ISIN.
- Target Client ID: This 16-digit code combines your DP ID and Client ID.
- Mode Selection: Choose the off-market transfer mode if it is an intra-depository transfer. For other transfers, select the inter-depository option.
Step 3: Once you have filled in all the details, sign the document and give it to your current broker. They may charge a small fee for the transfer, which can vary depending on the broker.
Step 4: Collect the acknowledgement slip.
After these steps, your shares will be transferred to your new demat account within 3-5 days.
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Online Method
Here are the steps you need to follow to transfer shares from one demat account to another via online mode:
Step 1: Go to the CDSL or NSDL website and sign up for either the ‘Easiest’ or ‘Speed-e’ facility.
Step 2: Fill in all the necessary details on the form and submit it.
Step 3: Provide a copy of the form to your depository participant, who will then send it to the central depository.
Step 4: Your information will be verified by the relevant authorities, and you will receive your login details within 1 to 2 days.
Step 5: Once you are logged in, you can transfer stocks from your demat account whenever you want.
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While transferring shares from Groww to other brokers, please note-
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Who Are the Participants in the Transfer of Shares?
When transferring shares from one demat account to another, understanding the key participants involved in the process is important. Here are the main participants:
- Transferor - Current owner of the shares who initiates the transfer.
- Transferee - Recipient of the shares, who becomes the new owner after the transfer is completed.
- Depository Participants (DPs) - These are entities registered with depositories like NSDL or CDSL, providing demat account services to investors.
- Depositories - NSDL and CDSL are the depositories responsible for holding and maintaining securities in dematerialised form.
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▶️ You may also want to know How to Transfer Shares from Another Demat Account to Groww |
Things to Consider When Transferring Shares
When transferring shares between demat accounts, remember these important points:
- Pick a trustworthy and reputed DP for a new demat account.
- Verify details like client ID, beneficiary account numbers, 1DP ID and ISIN.
- Keep records of the share certificates, transfer deeds and related documents.
- Monitor the transfer status and reach out to the DPs in case of any delays or issues.
- Seek advice from a chartered accountant or tax advisor to understand the tax consequences of the transfer and ensure compliance with reporting requirements.
What Are the Tax Implications of Share Transfers?
Transferring shares from one demat account to another owned by the same person does not incur taxes. However, if you transfer shares to someone else's demat account, it may lead to tax consequences.
Transfers without payment are considered gifts and are taxed under the Income Tax Act 1961. It is wise for both the person transferring and receiving the shares to seek legal advice before making such transfers.
The Bottom Line
By transferring your shares, you can ensure your investment strategy aligns with your financial goals. Now that you have understood the different processes to transfer shares between demat accounts, you can confidently manage your investments with greater flexibility. However, remember to consider the reasons behind this transfer and stay informed about all tax implications.