How to Transfer Shares from One Person to another online? | Income Tax | Gifts

Gift or Transfer of Shares


You may want to transfer shares from one person to another. There may be multiple reasons for doing so. Some of them are: you want to gift something new and different to your loved ones or transfer shares due to death, succession, etc. so it is important to learn How to Transfer Shares from One Person to another online.

One of the first things to bear in mind is “Who is involved in the transfer of shares”. Here are the following people/firm involved in the process :

  1. You must know the current broker (like Zerodha) and its associated depository firm (like NSDL/CDSL).
  2. Investor
  3. You also must know the new broker and associated depository firm.
  4. Transfer Type: We must first differentiate between two types of transfers based on two national depositories: NSDL and CDSL.
    1. In an intra-depository transfer, the shares move from one account to another held within the same depository (NSDL to NSDL).
    2. Inter-depository transfers happen when shares are moved from one depository to another( NSDL to CDSL).

Before we know the steps of transferring shares online let’s understand the impact of the income tax on such transactions when carried out from one person to another.

Income Tax


Here are the different scenarios which you might have in mind before you transfer the shares let’s discuss each one of them:

  1. When transferring shares between one’s Demat accounts, there is no income tax levied.
    This is because there is no transfer of ownership. Regardless, if any income is earned from this transfer, it will be treated as STCG (12 months or less) or LTCG (more than 12 months).
  2. In case the donee is a relative as per the IT act which includes spouse, children, and descendants of self/spouse, etc. (blood relatives), the gift received is not taxable, irrespective of the value of the shares transferred. 
    1. As per section 56(2)(vii), blood relatives include:
      Donor’s spouse
      Donor’s brother or sister
      Donor’s spouse’s brother or sister
      Either of the donor’s parent’s brother or sister
      Any of the donor’s lineal ascendant or descendant
      Any lineal ascendant or descendant of the spouse of the donor
  3. In a case shares transferred to another person are taxable in the hands of the recipient if the fair market value of the asset transferred is more than ₹50,000, under section 56(2) of the IT act.

Let us understand the process of the transfer of shares. All shares can be transferred either manually or online. However, we are explaining the online process only.

How to Transfer Shares from One Person to another Online?

NSDL Share Transfer to CDSL/NSDL Online
CDSL Share Transfer to NSDL/CDSL Online
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