Can We Transfer Shares From One Demat Account To Another?

After a well-known broking house was brought under scrutiny, India's stock market industry appears to be in the grip of a major storm. This has put several investors in a tizzy because they want to move or transfer their funds but are unsure how to transfer shares from one demat to another online.

Many investors are intimidated by the prospect of transferring their brokerage account. However, if you are in an unhappy brokerage relationship, don't be alarmed by the paperwork. You may be able to get a much better deal on commissions elsewhere; you may be dissatisfied with the tools or services provided by your broker; or you may want access to a broader product line of options, bonds, futures, and forex.

Have you opened a Demat account yet?

It's time to discover how this simplifies the process of transferring shares from one Demat account to another.

Trading through a Demat account is, in fact, the same as making transactions via a bank account. We are open Demat account to make secure transaction of shares. The only difference that needs to be understood is that you transfer shares rather than money through the Demat account.

We all use our Demat accounts frequently when buying and selling shares on the stock exchange. When you buy shares, our Demat account is credited, but when you sell them, the securities are deducted from the account. In this regard, a Demat account is the same as that of a bank account, with the exception that it caters with shares instead of cash.

It is also feasible to transfer the shares from one Demat account to another. However, when you transfer shares from one demat to another, the ownership remains the same, so there is no tax implication and, as a result, no transaction implication.

Reasons for how to transfer shares from one demat account to another in the first place?

Over time, investors are susceptible to opening multiple Demat accounts, making it increasingly difficult to keep track of them all. Maintaining multiple accounts can be time-consuming, especially if you only use one to hold your stocks and the others are dormant. One of the most standard reasons for people to transfer shares from one demat to another is to consolidate their holdings in these various Demat accounts.

Consolidating shareholdings into a single Demat account enables investors to view all of their equities in one place and enjoy a comprehensive view of their investment performance. It also saves investors money on annual maintenance fees and cuts down on the paperwork associated with managing multiple accounts.

There are numerous advantages to transferring shares from one demat to another. They are as follows:

• If you do have multiple Demat accounts, you may also want to consolidate them to make things easier and lower your Demat costs.
• You may currently have a single Demat account and wish to maintain separate Demat accounts for different activities, which would necessitate the transfer of shares from one account to another.
• To keep things simple, most people prefer to keep their Demat and trading accounts with the same broker. If you change brokers, you may want to change your Demat account.
• If you have long-term plans for certain stocks, you may want to put up a wall around them. In such cases, the Demat accounts must be classified appropriately, which will necessitate the transfer of shares once more.

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

The following individuals are involved in the transfer of shares from one Demat account to another:

1. Present Broker
2. An investor
3. New Brokerage
4. Depositories, such as NSDL and CDSL

The process to transfer the shares from one Demat account to another

In a nutshell, the process of how to transfer shares from one demat to another is as follows:

Step 1: The investor completes the Delivery Instruction Slip, i.e., DIS, and submits it to his or her current broker.

Step 2: The broker sends the DIS form or request to the depository.

Step 3 - Your existing shares will be transferred to the Demat account by the Depository.

Step 4 - Once all of the shares have been transferred, they will appear in the investor's new Demat account.

How to transfer the shares from one Demat to another?

There are two methods for transferring shares or holdings from one Demat account to another. You can use either the manual or online method to accomplish this.

Manually Transfer

You will need to obtain a Delivery Instruction Slip (DIS) from your broker for this. This DIS will provide you with the necessary information for the transfer of shares, which you must fill out before the shares can be transferred.

Beneficiary Broker ID - This is the broker's 16-digit ID. On this slip, you must provide the ID for both the existing and new brokers.

International Securities Identification Number - This is used to identify individual shares and should be carefully entered in the slip as it will be transferred to the ID you have entered.

Transfer mode - If you want to do intra-depository transfers, you must select off-market. If not, the inter-depository option must be chosen.

After filling and completing out all of the information on the slip, you must sign it. Following that, you must submit it to the existing broker. This transfer will be charged to you by the broker. However, the fees may differ.

Online Transfer

Central Depository Securities Limited (CDSL) offers the EASIEST feature that allows you to transfer shares from one Demat account to another online. You must follow the steps outlined below to accomplish this.

• Go to the CDSL website-: www.cdslindia.com and sign in.
• Select the Register Online option.
• Choose the EASIEST option.
• Fill out the form, print it, and send it to your Depository Participant (DP)
• DP will forward it to the Central Depository, which will verify your information.
• You will receive your login credentials via email within 1-2 days.
• By logging in, you can now view the list of brokers.

Things to consider when transferring shares

1. The investor's current stockbroker may charge a fee for this procedure. The fees may differ from one broker to the next.

2. If the investor wishes to close his or her Demat account with the current broker, the process is free of charge.

3. If the investor wishes to close the Demat Account, he must return the unused DIS to the broker.

Tax Implications When Transferring Shares

Shares may be transferred to different Demat accounts held by the same or different individuals. There will be no additional tax liability if shares are transferred to the same person.

It is crucial to note that the capital gain tax will be calculated from the date the stock was purchased. It is unaffected by the transfer date.

Assume you transfer shares in the names of different people. You must clearly state the reason for such transfers. If the transfer is supported by a gift deed and does not exceed the limit, there will be no additional tax liability. In this case, the tax liability will begin on the date of purchase. The audit trail can be used to track this down.

If you transfer the shares you received through a Demat transfer, you will be subject to capital gains tax.

How do you connect a bank account to a Demat account?

When it comes to linking a bank account to a Demat or Trading account, it is important to note that while the basic process is consistent, certain details may differ from one bank to the next. One primary account and two secondary accounts can be linked. All payouts will be processed through the primary account. Secondary accounts could be used to process pay-ins. To link your bank account to a Demat account, do the following:

Step 1 – Go to the bank's website where the account is held. Fill out the required form to start the process.

Step 2 – In some cases, it may be necessary to print the completed form and mail it at an address provided by the bank where the account is held.

Step 3 – Additional proof of the secondary bank account is required in order to add a secondary account. A cancelled and personalised cheque (with the recipient's name printed on it), a bank passbook statement, or a self-attested bank statement (including the IFSC Code/MICR Number) can all be used as proof documents.