How to Transfer Shares from One Demat Account to Another?

Investing in shares is a smart way to grow your wealth. With the advent of technology, buying and selling shares has become much easier. One of the most important aspects of trading is the dematerialisation of shares. In India, almost all shares are held in dematerialised form in a Demat account. As an investor, you might need to transfer shares from one Demat account to another due to various reasons like account consolidation, change in broker, or any other personal reasons. In this blog, we will discuss how to transfer shares from one Demat account to another and the things you need to keep in mind while doing so.

Table of Contents

• What is a Transfer of Shares?
• Who are the participants while transferring shares from one Demat account to another?
• The process of transfer of shares from one Demat account to another.
• Things to keep in mind while transferring shares.

What is a Transfer of Shares?

Transferring shares from one Demat account to another involves moving your existing holdings from your current broker's Demat account to a Demat account with a new broker. This allows you to consolidate your investments or benefit from the services offered by a different broker.

Who are the participants while transferring shares from one Demat account to another?

The main participants involved in transferring shares from one demat account to another are:

• Transferor (Account Holder): The person or entity who currently owns the shares and is initiating the transfer from their existing demat account.
• Current Broker (Depository Participant): The brokerage firm that holds the shares in the transferor's current demat account. They act as an intermediary between the transferor and the depository.
• Depository (NSDL or CDSL): The intermediary organisation that facilitates the electronic transfer of securities between Demat accounts. In India, there are two main depositories - National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
• New Broker (Depository Participant): The brokerage firm to which the shares are being transferred. They will hold the transferred securities in the transferor's new Demat account.

Process of transfer of shares from one Demat account to another

There are two main methods to transfer shares from one Demat account to another in India:

1. Manual Transfer:

This involves obtaining a Delivery Instruction Slip (DIS) from your current broker. The DIS contains details about the share transfer, including the security name, quantity, and the recipient's Demat account information. Here's a general breakdown of the steps:

1. Fill out the DIS with the required details, including your new broker's Demat account information.
2. Ensure you mention the Beneficiary Broker ID, a unique 16-digit ID for your new broker.
3. Submit the completed DIS to your existing broker, along with any processing fees.
4. The broker will then forward the DIS to the depository (CDSL or NSDL) for verification and processing.

2. Online Transfer:

Depositories (CDSL and NSDL) offer online facilities for share transfers:

1. CDSL Easiest: Register on the CDSL website and submit an online request. You'll need to get a printout of the request and submit it to your broker for verification.
2. NSDL Speed-e: Similar to CDSL Easiest, you'll need to register on the NSDL website and follow their process.
3. Once your details are verified, you'll receive login credentials to access the online transfer facility and initiate transfers directly.

Things to keep in mind while transferring shares

Here are some important things to keep in mind while transferring shares from one demat account to another:

• Demat account details: Ensure both the sending and receiving Demat accounts are KYC (Know Your Customer) compliant. Double-check all the beneficiary details, such as DP ID (Depository Participant Identification Number), client ID, and account numbers, for accuracy. Any mistakes can lead to delays or rejection of the transfer request.
• Transfer charges: Your broker may levy transfer fees to process the request. Check the charges beforehand and ensure sufficient balance in the demat account that holds the shares you are transferring to cover these charges.
• ISIN (International Securities Identification Number): This 12-digit unique code identifies specific securities. Verify that the ISIN of the shares you are transferring matches exactly between the two Demat accounts.
• Timeliness: The transfer process can take several working days, depending on the brokers involved and whether it's an intra-depository or inter-depository transfer. Initiate the transfer request well in advance, especially if you plan to trade the shares soon after.
• Tax implications: In most cases, transferring shares between your own accounts won't incur any tax liabilities. However, if you are transferring shares to another person, like a spouse or child, capital gains tax might apply depending on the holding period of the shares. It's advisable to consult a tax advisor for specific guidance.
• Tracking and confirmation: Once you submit the transfer request, review and confirm the details for accuracy. Keep track of the transfer status with your depository participant (DP). They will provide updates on the progress of the transfer.

List of top stock brokers in India where you can open your Demat account ⤵

Conclusion

In conclusion, transferring shares from one Demat account to another can be a relatively straightforward process if you keep certain things in mind. Whether you choose to do it manually or online, it's important to ensure that all the beneficiary details are accurate and that you have sufficient funds to cover any transfer charges. 

Additionally, tracking and confirming the transfer request can help avoid any potential delays or issues. By following these guidelines, you can successfully transfer your shares to a new Demat account and continue to grow your wealth. Happy investing!