If you hold two or more demat accounts, managing and maintaining them can become a hassle over the long term, if in effect you operate only one to hold your securities and the others remain inactive. Opening a demat account has become very easy these days, hence people tend to have multiple demat accounts but don’t ever use them.
In such a case, it is best to close the other demat accounts and consolidate your holdings to a single account. While it may seem like a cumbersome process, in reality, it is a fairly straightforward formality that can be completed in a few short steps.
Read on to learn how you can consolidate multiple demat accounts in India.
A DIS is essentially a form that allows demat account holders to transfer their holding from one demat account to another. The transfer of shares occurs between two Depository Participants or DPs, hence the instruction slip is a formal intimation to your DP that you would like your shares to be transferred from the account you hold with them, to another account.
The details of the source demat account holders and target demat account holders should be stated accurately and in full. Details such as the ISIN of the securities, details of the source and target demat account, DP ID will be specified. The DIS will have to be properly signed by account holders. Prior to initiating a transfer of shares, it is the account holder’s responsibility to ensure that there is no lien or outstanding credit owed to the broker. In case there is, it should be settled before the DIS is submitted.
The transfer of shares from one demat account to another qualifies as an off-market securities transaction. If the account holders for the source and target accounts are the same, then there will be no Securities Transfer Tax implications on the transfer of securities. The DP ID for the securities transferred will be modified, however the owners of the securities will remain unchanged.
On completing the transfer of shares to a single target demat account, you can proceed to close the existing demat accounts. The DP will have closure forms, which you can fill and submit to request that existing DP accounts be closed. This is provided that there is no outstanding credit against your demat account.
To sum up, the process of consolidating your demat accounts is a streamlined and simple transaction, as long as the shares are unencumbered and outstanding payments to the broking platform have been closed.
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