How to Gift or Transfer Shares from Your Demat Account
A Comprehensive Procedure for Gifting or Transferring Shares from Your Demat Account
Do you wish to gift relatives or friends some shares from your Demat account? Or perhaps you wish to transfer stocks to another Demat account that you own? Unlike sending money with a single click, transferring shares using a Demat account involves one too many steps. This guide elaborates the entire procedure of off-market Demat account share transfers in simple language so that you can transfer shares without any difficulty.
What Does Off-Market Transfer of Demat Account Means
An off-market transfer is simply transferring shares from one Demat account to another without trading them on the stock market. This is often done when shares are being gifted to family members. This type of transfer can also be done after the original owner of the account passes away as transfer of shares to legal heirs is allowed. If you have several Demat accounts, stocks can also be transferred between them.
Off-Market Share Transfer Procedure Steps
1.Confirm the Activation of Both Demat Accounts.
Before proceeding with the transfer, it is necessary to make sure that both the accounts of the sender (transferor) and receiver (transferee) are activated with NSDL or CDSL depository services.
2.Obtain the Delivery Instruction Slip (DIS)
Request the Delivery Instruction Slip (DIS) from your Depository Participant (DP) (brokerage company). You may either download it from the internet or pick it up at your broker’s office.
3.Complete all fields on the DIS Form
- Enter the following details in the DIS form:
- Account number of the receiver’s Demat account
- ISIN (identification number of the shares)
- Stock name with quantity
- When it comes to the reason for the transfer (Gift, sale, inheritance, etc.)
If your account exists with NSDL, the DP ID and Client ID of the other party must be provided. For CDSL, only the target Demat account number is sufficient.
4.Submit the Form DIS to Deposit Participant
Bring the completed form back to your Depository Participant (DP). In some other instances, the sender and receiver may jointly sign the form.
5.DP executes the Transfer.
After verification, the DP executes the transfer, and the shares will reflect on the receiver’s Demat Account in 2-3 working days.
Cost of Off-market Transfers of Demat Accounts
| Depository | Transfer Charges |
|---|---|
| NSDL | ₹15 – ₹25 per transaction |
| CDSL | ₹15 – ₹20 per ISIN |
| Zerodha | ₹25 + 18% GST per ISIN |
| Upstox | ₹20 per transaction |
| ICICI Direct | ₹25 per DIS slip |
If the transfer involves a sale, stamp duty may also apply.
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Important Things to Keep in Mind
- Both accounts belonging to the same depository (NSDL to NSDL or CDSL to CDSL) make for a simpler process. For separate depositories, an Inter-Depository Transfer Form is mandatory.
- When gifting shares to a family member, prepare the necessary documentation. Gifts to close relatives are exempt from taxation, but if the shares are sold later, capital gains tax will apply.
- Check that the signature of the person who fills out the DIS form is the same as the one at the DP. A mismatch will mean that the transfer will not go through.
- Incorrect information can delay or even cancel the transfer.
By closely following these steps, you should be able to transfer shares from a Demat account without breaking a sweat!
