Demat or dematerialization accounts hold the shares and securities in electronic form. When an investor or trader buys or sells shares from the market, it is done through the demat account. It is compulsory to hold shares and securities in the electronic form to trade or invest in the Indian stock exchange.
Demat account works just like your bank account that holds your money; the only difference here is that you transact in securities. One interesting feature of this account is that you can make demat to demat account transfer of shares. While transferring shares from one demat account to another of the same person, there is no tax implication because the ownership is not changing.
Reasons to Transfer from One Demat Account to Another Demat Account
- Investors generally prefer to keep the same broker for their trading and demat account. Likewise, if you change the broker, you might want to transfer your holdings from one demat account to another demat account.
- You can open multiple demat accounts with a single PAN. If you want to reduce the accounts and consolidate them to reduce your demat costs, you could transfer your holdings from all other accounts to one single account.
- If you prefer keeping the trading and investment accounts separate, in that case too, you will have to make the transfer from one demat account to another.
- If you want to transfer your demat account from a service broker to a discount broker,r then also you would need to transfer the demat account from one account to another.
How To Transfer Shares From One Demat To Another Online
You can transfer shares from one demat to another online by visiting the website of Central Depository Services (India) Limited (CDSL) or National Securities Depository Limited (NSDL). Once you log on to the website, look for the “Register Online” option and proceed with the transfer of shares. Provide the necessary details, print the form, and submit it to your depository participant. On successful verification, a password would be generated and sent to your email. Use the credentials and proceed with the process of transfer of shares online without any hassle.
You can also transfer shares manually depending upon which type of transfer is an intra-depository transfer or inter-depository transfer.
Tax Implications on Transferring Shares to Self and Another Person
The shares in the demat account can be transferred to the same person or another person. While making the transfer, it is mandatory to clarify which type of transfer you are making. Self-transfer does not attract any tax as the shares remain with the same person, just the demat account changes. However, when there is a transfer of shares from one person’s demat account to a demat account of another person, there might be tax implications depending upon the transaction’s legitimacy.
When you are looking to change your broker, you must select the other broker who provides all the services at a lower cost with good services. Kotak Securities is one of the top brokers that fulfills your demat and stock requirement and provides you seamless trading and investing experience.