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How To Transfer Shares From One Demat Account To Another?

An investor needs to know about signing up, how to claim profits, rewards, and how to transfer shares from one demat account to another? before stepping.

How To Transfer Shares From One Demat Account To Another

Dematerialization is the process of converting physical stock shares into digital form, which is considerably easier to manage and accessible from anywhere on the planet. Dematerialization aims to make it easier for investors to manage and monitor their investments by removing the need to keep physical share certificates. An investor must first open a Depository Participant account before trading online (DP). 

In this article, we will tell you exactly how to transfer shares from one demat account to another.

What Is A Demat Account?

A Demat account is a form of account where electronic copies of shares and securities are kept. A Demat account is a completely dematerialized account. A Demat account’s purpose is to hold assets that have been purchased or dematerialized (converted from tangible to digital shares) in order to make online share trading easier for users.

While online trading, shares are acquired and stored in a Demat Account, making it easier for users to trade. An individual’s stock, financial instrument, transfer fund, bond, and mutual fund holdings are held in a Demat Account.

When Do You Need To Move Your Funds?

There are several reasons why an investor might need to transfer shares from one account to another. Here are a few examples:

1. One of the motivations may be to consolidate all assets under a single roof, easy for efficient management.

2. Another reason might be that the investor wants to switch depository participants in order to get greater returns at a cheaper cost.

3. Many shareholders may want to transfer their shares from one Demat account to another after a terrible experience with their previous broker.

4. People transfer shares if they want to try different types of investments or periods or if they want to transition from a part-time to a full-time broker. People who prefer taking risks are prone to this.

How To Transfer Shares From One Demat Account To Another?

Users primarily utilize Demat accounts to regularly buy and sell shares on the stock exchange. When you acquire shares, the securities are credited to our Demat account, and when you sell shares, the securities are deducted from the account.

In this way, a Demat account is similar to a bank account, with the exception that it deals with shares rather than cash. It is also feasible to transfer your shares from one Demat account to another. When you transfer shares from one usable dematerialized account to another, the possession stays the same; therefore, there is no tax impact and, as a result, no transaction implication.

Parties Involved In Transferring Shares

In the process of sending stocks from a single Demat account to a different one, the following parties are involved:

1. Present Broker or Brokerage

2. Investor

3. A new broker

4. NSDL and CDSL and such depository services.

Things to Keep In Mind While Transferring Shares

The investor’s present brokerage may charge this procedure. The fees vary depending on the broker. The method for canceling an investor’s Demat and trading account with their current broker is free. If the investor chooses to shut the Demat Account, the new DIS must be returned to the broker.

Step-by-Step Procedure For Transfering Shares

Manual Procedure

You will need to get the delivery instruction slip (DIS) with your brokerage for the manual process. To complete a share transfer, the DIS has several necessary fields that must be filled out.

1. Beneficiary owner ID (BO ID): The broker’s 16-digit ID. In the slip, you must provide the IDs of both existing and new brokers.

2. ISIN (International Securities Identification Number): This is a number used to identify securities across the world. It’s a one-of-a-kind identifier for each of your assets in the Demat account. This number must be stated explicitly to specify which shares must be transferred.

3. Transfer mode: If the transfer is intra-depository, you should select the ‘off-market transfer’ alternative. Otherwise, it’ll be referred to as an ‘inter-depository transfer.’

You must sign below the form once you have fully filled out all the above areas. The signature must be identical to the one stored in the DP’s database. After that, you must send it to your present broker. It might take a day or two to figure out which shares to move to a different Demat account.

This transfer may be subject to fees imposed by the broker. The sum may differ from one brokerage to the next. On the other hand, the broker cannot charge you any fees if you shut your Demat account.

CDSL Central Depository Services India Limited

Online Procedure

EASIEST is a CDSL tool that allows us to send shares of one Demat account to some other online. Before you can begin, you must first register on the page. The following is a description of the procedure:

1. Select the Register Online option from the drop-down menu.

2. Pick an option- EASIEST

3. Fill in the blanks for the required details.

4. Print the page and hand it over to the depository participant (DP)

5. The DP will then transmit it to the central repository, where your information will be verified. Within a few days, you will get the login credentials through email.

6. Go to your broker list by logging in. You can now transfer your stock.

Tax Implications And Time Needed

Shares might be moved to separate Demat accounts held by the same person or other people. If shares are transferred to the same individual, there will be no additional tax payment.

 The capital gain tax will be calculated from the day the stock was first purchased. It is unaffected by the transfer date.

Assume you transfer shares between multiple people’s accounts. You’ll have to explain why you’re making these changes. If the transfer is backed by a gift deed and does not exceed the limit, there will be no additional tax burden. The tax due will be computed based on the purchase date. This may be tracked via the audit trail. If you transfer the shares you originally got via a Demat transfer, you will be subject to capital gains tax.

According to the current broker, transferring equities from the investor’s existing Demat account to the new broker takes 3-5 business days. The broker determines the cost of this service.

We hope that this article about transferring shares from one demat account to another was helpful for you! 

About Mohanraj

Mohanraj is SmartFinder's Top Editor.  Have written over 700+ posts for SmartFinder with a team of tech experts. Passionate about technology, Mohan is keen on bringing the latest tech news to millions of internet users in India. Find him on Twitter and Linkedin.

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