How to transfer shares from one demat account to another

Key highlights

• It is easy to transfer shares between demat accounts.
• You can transfer shares online or offline.
• Ownership of shares does not change when you transfer them to your other demat account. Hence, there are no applicable taxes.
• If an investor transfers shares to a demat account of another individual, capital gains tax will be applicable. The amount of tax depends on the holding period.
• The broker may charge a fee for handling the transfer request, but if the previous account is closed, no fee will be charged.

What is transfer of shares?

Transfer of shares is the process of transferring the ownership of existing shares from the present holder to another individual. An owner of shares can sell them at any time to obtain cash or change the composition of his investment portfolio. Share transfers popularly happen either through selling or gifting.

Here are some reasons why you may want to transfer your shares:

1. You have multiple demat accounts, and you want to consolidate all the shares in a single account.

2. You want to separate the shares into different accounts. This is good for long-term plans like retirement, children’s education or marriage.

3. You want to change your existing broker for some reason.

4. You want to go for a full-service broker, like Kotak Securities, to get more comprehensive services like analysis reports and trading tips.

The process to transfer shares from one demat to another

Your shares can be transferred from one demat account to another using the guide given below.

• Step 1: Get the Delivery Instruction Slip (DIS) from your current broker. If your current broker is Kotak Securities, you can get it on the Kotak Neo App. Just follow this path: Go to Profile - Additional Services - Services & Support - Raise a Service Request - Raise a DIS request

• Step 2: Fill out the Delivery Instruction Slip (DIS) and submit it to your current broker. To fill the DIS with Kotak Securities, follow this guide:

• Select appropriate box for Market Trade OR Off-Market Trades OR Inter Depository Transfer (i.e. NSDL to CDSL or vice versa).

• Accordingly fill target account details. CM BP ID, CM Name, Market Type and Settlement Number for Market Trades.

• For Off-Market trades, fill out Target DP ID, Target Client ID, Target DP name and provide appropriate reason code and reason/ purpose and consideration (if applicable).

• For Inter Depository Transfer, in addition to Target DP ID, Target Client ID and Target DP name, please provide Off-Market details i.e. Reason code, reason/purpose and consideration (if applicable) OR settlement details.

• Specify the ISIN of security to be transferred. Confirm this with your transaction statement. A maximum of 4 ISINs can be transferred per DIS. Use multiple DIS if you wish to transfer more than 4 ISINs.

• Specify the name of the security to be transferred, its quantity in figures and in words.

• The account holder’s signature has to be affixed as per the signature recorded in the Kotak Securities demat account.

Once, you have filled the DIS, you’ll need to submit it at a Kotak Securities branch. Scanned copies of DIS will not be executed. We will fill the instruction reference number and execution date once the DIS is executed.

• Step 2: The broker will forward the DIS form to the Depository.
• Step 3: The Depository will transfer your current shares to the demat account.
• Step 4: Once the transfer is completed, your transferred shares will appear in your new Demat account.

Who is involved in the transfer of shares from one demat account to another?

Numerous parties are involved transferring shares from one demat account to another to guarantee a seamless and safe process. They are:

• Depository Participant (DP)
• Transferor (Seller) and Transferee (Buyer)
• Depository
• Registrar and Transfer Agent (RTA)
• Stock Exchange

Types of share transfers

There can be two types of share transfers. They are as follows.

1. Intra-depository transfer: If the transfer is within a depository, it is called an intra-depository transfer.

2. Inter-depository transfer: An inter-depository transfer involves transferring shares from one depository to another.

The Manual Procedure

For the manual procedure, you will have to get the Delivery Instruction Slip (DIS) from your broker. You will have to fill out some mandatory fields in the DIS. These include:

1. Beneficiary owner ID (BO ID): It is the 16-digit ID of the broker. You will have to mention the ID of both the brokers involved.

2. International securities identification number (ISIN): It is a unique identification number for identifying the shares in a demat account. You must mention this number to specify the shares that need to be transferred.

3. Mode of transfer: If it is an intra-depository, you must choose the ‘off market transfer’ option. Otherwise, it’ll be an inter-depository transfer. Once you fill out the form, you must sign it. The signature needs to match the one saved in the DP database. After this, you need to submit the DIS slip to the current broker. Your broker may levy some charges for the transfer. This amount may vary from one broker to another. However, the broker cannot charge any fee if you close the demat account.

The Online Procedure

There are two ways to transfer shares online from one demat account to another. One is via Central Depository Services Limited (CDSL) and another is through National Securities Depository Limited (NSDL). CDSL has a feature is called ‘EASIEST’ while NSDL has a ‘Speed-e’ facility to help you transfer shares from one demat account to another online. You need to register yourself on these websites to use these. The process for this is as follows:

1. Visit the website.
2. Register for EASIEST or Speed-e facility.
3. Fill in the details and submit the form.
4. Take a printout and give it to the DP.
5. The DP will forward the transfer request to CDSL, which will verify your details. You will get the login credentials in your email within a couple of days.
6. Login with the credentials and transfer your shares.

The time required to transfer shares

Your current stockbroker will usually take 3 to 5 working days to transfer shares from your existing demat account to the new one. However, this may vary from one broker to another. Generally, online transfer of shares takes place faster than manual transfers.

In addition, if there are weekend holidays, it may take a few more days. The depositories are closed on national holidays. Some brokers may not work on those days. So, your transfer request gets processed when the depositories reopen on the next working day.

Tax implications when transferring shares

Shares can be transferred to different Demat accounts of the same individual or other persons. In case of transfer of shares to the same person, there will be no added tax liability. However, note that the capital gains tax will be calculated for the period from the initial date of purchase of the stock. The transfer date will not affect it.

If you transfer shares to another individual, you will have to mention the reason for the transfer. There will be no extra tax liability if you gift the shares. However, it should not exceed the specified limit. Here, taxes are calculated from the original purchase date.

Capital gains tax is applicable if you transfer the shares you have received initially via a transfer.

Things to keep in mind while transferring shares

• The present broker may levy a charge for transferring the shares. These charges usually differ from one broker to another.

• If the investor wants to close the demat account, he must return any unused DIS to the broker.

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