Explained: Here’s how you can transfer shares to a different demat account

Just like how you can transfer money from one bank account to another, a demat account can be used to transfer shares to a different account. This transfer is, however, not a transaction because the ownership remains unaffected in case of share transfer. Hence, one doesn’t have to face any tax implications as a result of such share transfers.

But why would you want to transfer your shares in the first place? The most common reason to transfer shares from one demat account to another is when you change the brokerage firm. Switching to a new broker means opening a new demat account as well. The next obvious step is to transfer the shares from your previous account to a new one.

But before you decide to transfer the shares, it is important to know that all the shares are held in either of the two depositories of India that are authorised to hold them on behalf of the account holders. The two depositories are National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).

What is the mode of transfer of shares? This dependents entirely on the depository associated with your broker. If the account holder’s previous and new brokers are linked with the same depository, the transfer will be considered as intra-depository. If the existing and new brokers are linked to different depositories, an inter-depository transfer of the shares would take place.

To know the step-by-step guide for transferring shares, watch the complete video…