Online Off-Market trnsfr to brother -NSDL Stock Holding Corporation's Demat Ac - Reason for Transfer

Hi Kannan,

Thanks for your detailed query about off-market transfers between joint and single Demat accounts, especially regarding the trade reason and income tax implications. Let me clarify your doubts one by one.

1️⃣ Can you use “Transfer to Own Account” when transferring from a joint account to your brother’s single account?

• No, this is not appropriate.
  "Transfer to Own Account" generally means transfers between Demat accounts belonging to the same single owner (e.g., your Demat account A to your Demat account B).

• In your case, since the source account is a joint account (you + your brother) and destination is only your brother, these are different ownerships.

• Hence, "Transfer to Own Account" is not correct here.

2️⃣ Should you select “Gift” and specify family relation as "Brother (including Step Brother)"?

• Yes, this is the correct option for transfers where ownership changes and no sale consideration is involved.

• Off-market transfer as a gift to a specified family member (brother) is acceptable and recognized by NSDL/Depositories.

• You must mention the relationship correctly (Brother/Step Brother).

3️⃣ Why is “Transfer between Specified Family Members” rejected online?

• Some DP (Depository Participants) require physical Delivery Instruction Slip (DIS) for certain trade reasons like "Transfer between Specified Family Members."

• Online platforms sometimes restrict such transfers to offline mode to avoid misuse or for compliance reasons.

• So, you may be required to submit a physical DIS signed by the joint account holders to the DP for this reason.

4️⃣ Income Tax Implications on Off-Market Transfers

a) Transfer to Own Account

• Since ownership remains with the same person, no income tax event arises.

• No capital gains tax or gift tax implications.

b) Transfer as Gift to Brother

• Gift of shares to brother is exempt from Gift Tax (no tax on gift received from specified relatives, which includes brother).

• However, cost of acquisition for your brother will be the same as your cost (i.e., cost gets transferred).

• When your brother sells the shares later, capital gains tax will be calculated based on your original purchase price.

• You will not pay any capital gains tax at the time of gift transfer.

Summary Table

• If online transfer is not allowed, submit physical DIS.

Recommendations

• Use “Gift” trade reason and specify relationship as Brother.

• If online transfer is blocked for this reason, submit physical DIS signed by both holders.

• Keep proof of gift (DIS copy, communication) for your records.

• Inform your brother about cost basis transfer to plan future capital gains.

If you want, I can also help you draft the physical DIS or provide further details on documentation needed for off-market gifts.

Let me know if you want a quick step-by-step for submitting physical DIS or more tax details!