Way To Transfer Shares From One Demat Account To Another

Equity trading has undergone a drastic transformation over the past three decades. Before 1991, share trading used to happen physically. Since then dematerializing of physical share certificates took place and people started holding shares in a digital format which was one of the biggest revolutions in the history of equity trading.

Demat account: 

It is an account where investors will hold all the investments digitally and at one place. An investor will have to open an account in case he wants to convert his physical shares into electronic shares.

Trading account: 

This account helps an investor to buy and sell shares in the stock market. Hence, if one wants to trade in the stock market, he will have to open a trading account without which he would not be able to trade because the demat account feature is to hold the shares and will not allow making any transaction.

Benefits of having Demat account:

1. Holding shares and securities digitally will eliminate the risk of damage, loss, and theft of physical certificates
2. It facilitates the quick transfer of shares
3. It helps to hold multiple assets like mutual funds, bonds, equity shares, and government securities in one place
4. It is easily accessible through smartphone or desktop
5. Nomination facility is also provided where an investor can decide on its nominee and easy transfer of shares will take place after the demise of the investor
6. It helps an investor to quickly apply for IPO
7. It provides a digital record and history of share ownership

Benefits of having a Trading account:

1. It makes the process of trading shares smooth and quick which encourages investors to invest more often
2. It provides access to all the exchanges like BSE, NSE, MCX, and NCDEX which helps an investor to invest on any platform from one trading account
3. Some brokerages also have apps which helps investors to ascertain whether his investment is making profit or loss at any given point of time

The most important feature of having a demat account India is, that it also facilitates easy transfer of shares from one account to another. Gone are the days when it was very difficult to transfer shares from one person to another. Investors can transfer shares from one Demat account to another in both ways either physically or online.

The transfer process can fall under either of the two below scenarios:

1. Intra-depository transfer: In this transfer, it is within a depository i.e. from NSDL to NSDL
2. Inter-depository transfer: In this transfer, it is from one depository to another i.e from NSDL to CDSL

Offline transfer procedure:

It is a four-step process as mentioned below:

Step 1: Procure and fill DIS (Delivery Instruction Slip) with all the details and submit it to the broker (While filling DIS, the investor will have to provide information on whether it is an inter-depository transfer or intra-depository transfer)

Step 2: The broker will forward the DIS request to the depository

Step 3: The depository will transfer all the shares that are listed in DIS to be transferred to the Demat account

Step 4: On successful transaction, shares will reflect in the requested Demat account

Online transfer procedure:

Using CDSL easiest:

Step 1: Investors will have to register on the CDSL website and select the option EASIEST facility

Step 2: Duly fill the form and submit the printout of the form to the depository participant (DP)

Step 3: DP will forward the form to the central depository for verification of details and they will provide login details within a couple of days

Step 4: The investor will have to log in and then he can transfer shares

Using NSDL:

Step 1: Investors will have to register on the Speed-e platform available on the NSDL website

Step 2: Duly fill the form and submit the form to DP

Step 3: DP will verify all the details and assign a login id that will help to procure a smart card kit, Digital signature certificate, and Personal identification number

Step 4: Install the smart card kit and transfer the shares

Things to keep in mind while transferring shares:

1. Time taken: DP will take about 3-5 business days for transferring shares.
2. Charges: They may charge for the services rendered which might differ from DP to DP. In case of closure of the Demat account, it would be free of cost.
3. Tax levied: Capital gain tax is levied if the transfer is between two different individuals but if it is in the form of a gift, it may not attract any additional tax.