Switching brokers or gifting stock? Here’s how to transfer shares to a new demat account

Investors may need to transfer shares from one demat account to another several reasons, such as switching brokers, gifting shares or consolidating multiple accounts. The transfer process allows securities to be shifted electronically without selling the shares, ensuring continuity of ownership (if not gift) and avoiding unnecessary transaction costs.

Transferring shares from one demat account to another may involve certain charges. Your bank of broker usually levy a fee of ₹10- ₹50 per transfer, or per type of share, while some may charge based on the number of shares transferred, according to a report by ClearTax.

In some cases, transfers between accounts held with the same DP may be free of cost. Additional charges such as stamp duty or tax implications may also arise in cases involving sale of gifting of shares.

Ways to transfer shares to a new demat account

There are primarily two ways through which investors can transfer shares from one demat account to another:

• Off-market transfer: This method lets you move shares directly between demat accounts (yours or someone else’s) without selling them on the stock market. You authorise your depository participant (DP) to execute this by filling out and submitting a physical delivery instruction slip (DIS).
• On-market transfer: This way routes transactions through the stock exchange to match buyers and sellers, settling them according to market cycles. This triggers realised profits and losses. Since in this case the shares going to the buyer's demat account, it's considered selling and not just moving shares between your own accounts.

If you want to move shares between your own demat accounts or gift them, then you must use the off-market transfer option as it lets you transfer securities directly without impacting the order book.

What is the process to transfer shares?

There are primarily two ways through which investors can transfer shares from one demat account to another, which includes the online method and the offline method. Here's how each method works.

Manual transfer method

Under the offline method, investors are required to obtain a DIS from their existing broker. To complete the transfer successfully, you need to fill the following details carefully:

• Beneficiary broker ID : This is a 16-digit unique ID of the broker or the banks involved in the transfer of shares. An investor is required to provide the ID for their existing, as well as the new broker on the slip.
• International Securities Identification Number  (ISIN): This number identifies the individual share in an investor's account. This number must be mentioned along with the quantity of the shares.
• Mode of transfer: If you want to opt for an intra-depository transfer, then you must choose the off-market transfer option. Otherwise, you can select the inter-depository option, according to a blog post by HDFC Bank.

After filling in the required details, investors need to sign the DIS and submit it to their existing broker for processing. Once the request is verified, the broker initiates the share transfer process and levy applicable charges for transferring the securities from one demat account to another.

Online transfer method

The Central Depository Services (India) Limited or CDSL offers an option to investors to do an online transfer of shares, known as electronic access to securities information and execution of secured transactions (EASIEST). Through this method, you can quickly transfer shares from one demat account to another online. Follow these steps:

• Login to the CDSL platform using your details
• Click on the Register Online
• Select the EASIEST option
• Fill in the required details on the portal
• Send a copy of the details to your respective depository participant

The depository participant forwards the registration request and documents to to the central depository for verification. After the details are verified, investors receive the login credentials within 1-2 days, according to HDFC Bank. Once logged in, you can view the list of registered brokers or beneficiary accounts and initiate the transfer of shares electronically.