Basic Terms4 min read

What is Off-Market Transfer of Shares? When and Why It Is Done

An off-market transfer is the direct movement of shares from one demat account to another without going through the stock exchange. The shares are not sold. They are simply transferred between two accounts, similar to how you would transfer money between two bank accounts. No exchange matching, no brokerage, and no exchange charges.

Say you hold 1,000 shares of Infosys in your demat account with one broker, and you want to move them to your demat account with another broker. You do not want to sell and rebuy because that would trigger capital gains tax. An off-market transfer moves the shares directly without any sale transaction.

When is Off-Market Transfer Used?

Switching brokers. Transfer holdings from old demat to new one without selling.
Gifting shares. Transfer shares to family members as a gift.
Estate distribution. Transfer inherited shares to legal heirs after transmission.
Consolidation. Move shares from multiple demat accounts into one for easier management.
Private deals. Transfer shares as part of a private agreement between two parties.

How to Initiate an Off-Market Transfer?

Submit a Delivery Instruction Slip (DIS) to your DP or use the online transfer facility if available. You need the receiving account's DP ID and client ID, the ISIN of the shares, and the quantity to be transferred. The instruction is processed by the depository and shares are credited to the receiving account typically on the next working day.

For online transfers, both CDSL and NSDL offer electronic DIS through their portals and through broker platforms. This is faster and more secure than the paper DIS.

Investments in securities market are subject to market risks. This article is for educational purposes only.

Frequently Asked Questions

Is an off-market transfer taxable?

The transfer itself is not a taxable event if no consideration is exchanged. However, if you receive shares as a gift and the market value exceeds Rs.50,000, it may be taxable as income in your hands unless the gift is from a specified relative. When you eventually sell the gifted shares, capital gains tax applies based on the original purchase cost and holding period. Consult a CA for specifics.

Can I do an off-market transfer between NSDL and CDSL accounts?

Yes. This is called an inter-depository transfer. The process is similar but involves coordination between both depositories. It may take one additional working day compared to a transfer within the same depository. Both the delivering and receiving DPs need to process their respective sides of the instruction.

Is there a limit on how many shares I can transfer off-market?

There is no regulatory limit on the quantity of shares you can transfer. However, large transfers may trigger additional verification or reporting requirements depending on the value. Transfers above certain thresholds may also require additional documentation from the DP.

What charges apply for off-market transfers?

The delivering DP charges a fee per ISIN or per transaction, typically Rs.25 to Rs.50. The receiving DP usually does not charge. There is no brokerage, STT, or exchange charges because the transfer does not go through the exchange. This makes off-market transfer significantly cheaper than selling and rebuying.

Can off-market transfers be reversed if done by mistake?

Once an off-market transfer is processed and the shares are credited to the receiving account, it cannot be automatically reversed. You would need to initiate a new off-market transfer from the receiving account back to the original account. This is why careful verification of the receiving account details is important before submitting the instruction.

Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice.