Guide explains off-market share transfer for gifting

Transferring shares off-market from one Demat account to another is a straightforward process. It is often done for reasons like gifting shares, moving assets, or handling inheritance. Unlike on-market transfers, this method does not involve selling shares on a stock exchange. Here is a simple guide on how to do it. First, make sure both the sender and recipient have active Demat accounts with a Depository Participant (DP), such as NSDL or CDSL. This is a crucial step before starting the transfer process. Next, you need to obtain a Delivery Instruction Slip (DIS) from your DP. This form allows you to initiate the transfer. You can get it at your DP’s branch or sometimes download it online. After you have the DIS, fill it out carefully. You will need to provide details like the recipient’s Demat account number, the unique ISIN for the shares, and specify if it is a gift or a sale. Additionally, indicate the reason for the transfer. Once the DIS form is completed, submit it to your DP. You may need to attach supporting documents, and some brokers might ask for the signatures of both the sender and the recipient for verification. The DP will process the transfer and verify all details. Typically, the shares should appear in the recipient’s Demat account within two to three working days. However, be aware of transaction charges for off-market transfers, which vary by DP. If there is a sale involved, stamp duty may also apply. If both accounts are under the same depository, the process is simpler. If not, you will need to fill out an additional form for inter-depository transfer. For gifting shares, proper documentation is crucial as gifts from close relatives usually do not incur tax. But if the shares are sold later, capital gains tax may apply. Finally, ensure all details like ISIN or account numbers are accurately filled out. Mistakes can delay or even cancel the transfer.