How to Transfer Shares from One Demat Account to Another: A Quick Guide

Picture this: You have just opened a new demat account with another broker to benefit from lower brokerages. Now you want to consolidate all your investments into one place instead of managing multiple demat accounts. You must be wondering, is this even possible? The answer is yes. You can simply transfer your shares from one demat account to another without affecting your ownership.

In this article, we will explore how to transfer shares from one demat account to another, its benefits, risks, and more.

What is Transfer of Shares?

Before delving into the process of transferring, it is important to understand what share transfer is. Share transfer refers to moving securities held in demat in electronic form, such as shares, ETFs, and bonds, to another demat account.

It is worth noting that there will be no change in ownership after the transfer if the share transfer is done between two demat accounts belonging to the same person. There can be share transfers in case of gifting, inheritance, or transferring to another individual's demat account as well.

Intra Depository Transfer vs Inter Depository Transfer

The share transfer type will depend on whether the two demat accounts used for the purpose are under the same depository.

Intra Depository Transfer

Intra-depository transfers are carried out when both demat accounts are from the same depository.

• NSDL to NSDL
• CDSL to CDSL

Inter Depository Transfer

Inter-depository transfers will be done when one account is in NSDL while the other is in CDSL.

• NSDL to CDSL
• CDSL to NSDL

How to Transfer Shares from One Demat Account to Another?

There are generally two methods for transferring shares: an online method provided by various brokers and an offline method using a Delivery Instruction Slip (DIS).

Method 1: Online Transfer of Shares

Many brokers in India offer online transfer facilities, making the process faster and more convenient.

Step 1: Register for the online share transfer service offered by your depository.

• NSDL: Register for the Speed-e facility.
• CDSL: Register for the Easiest facility.

Step 2: Before starting the share transfer, register the destination demat account as a beneficiary by using DP ID and Client ID. This may take a few hours, depending on your broker.

Step 3: Log in to your broker’s online portal and provide the following details:

• Beneficiary demat account details
• ISIN of Securities
• Number of shares to be transferred
• Type of transfer (inter-depository or intra-depository)

Step 4: Verify and authenticate the transaction using OTP or TPIN, depending on your broker, and submit the request. Step 5: You can track the status of your share transfer through the online portal.

Method 2: Offline Transfer Using DIS

If you prefer the offline method, you can transfer shares through DIS by following the below-mentioned steps:

Step 1: Get the Delivery Instruction Slip (DIS) from your broker.

Step 2: Fill out the required information

• Beneficiary DP and Client ID
• International Securities Identification Number (ISIN)
• Number of Shares
• Transfer type

Step 3: Submit the DIS to your broker.

Step 4: Collect the acknowledgement receipt after submitting the DIS.

Step 5: After verification of your request, the shares will be transferred to the beneficiary’s demat account.

Benefits of Transfer of Shares

The following are some benefits of share transfer:

• Easier Portfolio Management: One of the biggest benefits is that you can manage your investments from one demat account.
• Cheaper Brokerage and AMC: Most investors transfer their shares to another broker to benefit from lower brokerage rates or an AMC.
• No Need to Sell Investments: You do not need to sell your investments, as the securities are transferred directly to your new demat account while remaining in your name.
• Investment Continuity: Your investment strategy remains unchanged, as ownership of the securities continues to be owned by you.

Risks Involved in Transfer of Shares

Despite the safe process, there are a few risks which investors should be aware of:

• Incorrect Details: Using an incorrect demat account number or ISIN could delay transfer requests or may even get rejected.
• Processing Delays: Share transfers may take longer due to technical problems or holidays, or incomplete documentation.
• Transfer Charges: Certain depository participants (DPs) may also charge for transferring securities. It would help if you checked the charges applicable.
• Temporary Suspension of Trading: During the time of the transfer of the securities, you won't be able to sell them.

Taxation on Shares Transfer

Transfer Between Your Own Demat Accounts

There will be no tax liability as there is no change in ownership. The original purchase date and acquisition cost are carried forward and are considered when calculating capital gains tax once these shares are eventually sold.

Transfer of Shares as Gift

• Donor: Transfer of shares as a gift is totally exempt from any tax liability.
• Recipient (Relatives): Acceptance of shares by relatives (spouse, parents, siblings, etc.) is totally tax-exempt.
• Recipient (Non-Relatives): The share transfer will be taxable if the value exceeds ₹50,000 per financial year. The total amount becomes taxable under "Income from Other Sources".

Sale After Transfer

If you have sold shares, you initially received them after transfer. Then it will be considered as capital gains. The tax is calculated based on the holding period and the applicable tax rules at the time of sale.

FAQs

Can I transfer shares from one demat account to another without selling them?

Yes, you can transfer shares directly from one demat account to another without selling them. This allows you to switch brokers or consolidate your investments while continuing to own the same securities.

Is there any charge for transferring shares?

Yes, most brokers or Depository Participants (DPs) may charge a nominal fee for transferring shares. The charges vary from one broker to another, so it's advisable to check the applicable fee beforehand.

Can I transfer shares between NSDL and CDSL Demat accounts?

Yes, shares can be transferred between NSDL and CDSL accounts through an inter-depository transfer. You need to provide the correct beneficiary account details while initiating the transfer.

Do I have to pay capital gains tax when transferring shares to my own Demat account?

Generally, no. Transferring shares between two demat accounts owned by the same individual is not considered a sale and typically does not attract capital gains tax. Tax is usually applicable only when the shares are sold.

What documents are required to transfer shares offline?

For an offline transfer, you mainly need a Delivery Instruction Slip (DIS) issued by your Depository Participant. The slip must be filled with the correct beneficiary details, ISIN, number of shares, and your signature.

Can I transfer only a few shares instead of my entire portfolio?

Yes, you can transfer selected shares or a specific quantity of shares. There is no requirement to transfer your entire portfolio.

What happens if I enter incorrect details during the transfer?

If the beneficiary account number, DP ID, ISIN, or other details are incorrect, the transfer request may be delayed or rejected. Always verify the information carefully before submitting your request.