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How to transfer shares from a demat account to another

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However, some new-age stock brokers like Zerodha and Angel One (earlier Angel Broking) and a few others offer you the convenience of easily transferring shares online. The online transfer can be done in two ways—either via your demat account or by registering for CDSL Easiest. CDSL is short for Central Depository Services Ltd, and Easiest stands for Electronic Access to Securities Information and Execution of Secured Transactions.

But not all demat account providers or depository participants such as stock brokers and banks facilitate this. In many cases, you still have to go the old-fashioned offline or physical way— apply for a physical delivery instruction slip (DIS) booklet, fill in all details in it, and deposit it with your bank or stockbroker along with the client master report (CMR). CMR is a digitally or physically signed certificate with your demat details, issued by your broker.

DIS is akin to a cheque, when you are transferring money from one bank account to another. Just like a cheque, you can transfer stocks between demat accounts by filing up and signing a DIS.

There are two types of share transfers. The first is closure-cum-transfer, wherein you close the old account and transfer all its holdings to a new demat account. Second is just a partial transfer, where the old account remains active. In case of closure-cum-transfer, the process can be done via physical mode only except for where the broker facilitates it online. CDSL Easiest does not have provision for closure-cum-transfer requests. Also, unlike in the case of transfer of shares, where the source and the target demat accounts can belong to different individuals, closure-cum-transfer can be done only between two demat accounts belonging to the same person (single or same joint account holders).

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Offline transfer of shares

Under the offline route, you have to first apply for a delivery instruction slip (DIS) booklet. You can do this through your broker’s mobile app / website or by email, or by visiting the broker’s office. In case of banks, you can do this via net banking or going to a designated branch. Many brokers give you the option of having it delivered at your registered address or collecting it from their office. With banks, collecting it in person may not be an option.

Next, the filled-up DIS has to be deposited at the broker office/bank branch from whose demat account the transfer is being initiated. Note that, in case of banks, the DIS can be submitted only at a few designated branches. You need to key in basic details such as the transferring account holder’s name, the Depository Participant ID and client ID for the target demat account, shares (ISIN and quantity), etc. ISIN is the unique number allotted to each listed security. You have to submit the CMR too. This has to be obtained from the broker of the target demat account to which shares are being transferred.

According to a few investors that Mint reached out to, share transfer through the physical mode took them anywhere from a couple of days to a month after submission of the DIS.

Transfer of shares online

For transferring the shares online, you have two options. First is to do this via your demat account and the second is via the relevant depository’s (CDSL/NSDL) website.

While certain brokers may offer an online transfer option, the process may not be completely online due to safety reasons. For example, the initial registration for ICICI Direct’s e- instruction process requires at least one of the account holders to submit the form in person. Once your registration is approved, you can transfer shares to any of the demat accounts (pre-notified, up to a maximum of five) completely online. There can also be monetary limits on the value of shares that can be transferred online.

You should register online with CDSL Easiest if the source demat account (from which shares are being transferred) is with CDSL, and with NSDL SPEED-e, if it’s with NSDL. The registration process for CDSL Easiest is fairly convenient and can be completed online. According to a person familiar with CDSL Easiest, in case of a jointly-held demat account, however, the form will have to be submitted physically and will require a declaration from all the account holders in favour of the person operating the account.

Once the registration is complete after approval from the broker, you can initiate the transfer of shares to any other demat account, with CDSL or NSDL. All the investors that Mint spoke to have transferred shares only between CDSL demat accounts (intra-depository transfer) via Easiest and have had a smooth experience. Inter-depository transfers, however, come with additional steps.

To ensure that shares do not get fraudulently transferred out of your demat account, there are safeguards built in the system. According to Harshad Malushte, head – DP operations, HDFC Securities, as an additional security measure, a share transfer request through CDSL / NSDL has to be authenticated through an OTP sent to your registered email ID and mobile number.

Cost, portfolio, and taxation

No charges apply if you close your demat account and transfer all your holdings to another demat account. In case of only a transfer of shares, the charges are minimal—a small percentage of the transfer value or a flat charge such as 15-25 per share. In case of transfers involving some consideration (payment for shares transferred), stamp duty is applicable.

Loss of records, taxation

When you transfer shares, do the records of your original purchase prices and quantities remain? One investor pointed out that such information for the transferred shares were not visible in his target demat account (Groww), and he had to extract this information from his source account (Angel) and save it for future reference. But according to another investor, he was able to see these details after a share transfer from his Zerodha to Paytm Money demat account. “Some brokers give clients the option of updating purchase price and date manually in their mobile app or web portal,” says Hina Qureshi, senior vice president & head–digital Business, Mirae Asset Capital Markets (I) Pvt. Ltd.

“Transfer of shares from one demat to another belonging to the same person is not a taxable transfer,” says Neeraj Agarwala, partner, Nangia Andersen India. He explains that when shares are transferred from say, A to B as a gift, taxability depends on their relationship. If A and B belong to the same family (in specified relationships like parent-child or spouses), there would be no tax implication. However, if they are not part of the same family, the transaction will be taxed in the hands of B if the aggregate value of gifts received exceeds 50,000 in a year.

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