How Are Securities Transmitted on Death of Demat Account Holder?

When a Demat account holder dies, the securities in their account do not lapse. The shares are instead handed over to the legal heir via a process called transmission. The process depends on whether a nominee has been appointed by the Demat account holder.

A nominee is the individual to whom the assets of the Demat account are transmitted in the event of the death of the account holder. Whether the deceased had a joint Demat account or an individual one also matters.

Since a Demat account stores securities electronically, legal heirs/nominees often have to interact only with the Depository Participant (DP) who opened the original Demat account.

This article explains how shares are transmitted to the nominee in different scenarios.

Key Takeaways

• A nominee can claim assets in a Demat account after the death of the account holder after submitting documents including TRF (Transmission Request Form) and death certificate.
• In case of a Joint Demat Account, the surviving account holders can claim the assets.
• No capital gains tax applies at the transmission stage.
• Capital gains tax may be applicable after the nominee sells the securities.
• Under the new QTP route, small claims can be processed with simplified paperwork for immediate relatives.

How are Securities Transferred After a Demat Account Holder’s Death?

Before you read how the transmission of securities in their Demat account usually happens in one of these three scenarios:

• Nominee exists
• In case of Joint Demat Account holder
• If there was a single owner and no nominee exists

Except in the second case, the securities would need to be transmitted to a different account, making it important to understand how to transfer shares from one Demat account to another.

1. Nominee Exists

When an investor is opening a Demat account, it is mandatory to appoint a nominee or opt out of the process in the case of an individual account. If a nominee exists, they can claim the securities after sending the following documents to the office of the depository participant:

• Transmission Request Form (TRF): This is a form that contains the details of the deceased client, the nominee, and the assets contained in the Demat account that need to be transferred. The form can be downloaded from the website of the depository participant (DP) or the Central Depository (CDSL/NSDL).
• Death certificate: A copy of the death certificate of the deceased account holder, notarised or attested by a Gazetted Officer, must be submitted.
• Client master report: A client master report, or CMR, is an important KYC document that contains all the details of the Demat account holder. The CMR can be downloaded from the website or mobile app of the nominee's Depository Participant (DP).
• Self-attested PAN and Aadhaar card: The nominee must provide self-attested copies of their identity documents as part of the KYC verification.

Note: No succession certificate or court order is needed if a nominee exists. The nominee can also receive the shares as a trustee on behalf of the legal heirs. This means that the nominee is not the permanent owner of the securities and legal heirs could have a separate claim under personal law.

2. In Case of Joint Demat Account

In case of Joint Demat Account, the surviving account holders take ownership of the assets based on the principle of survivorship. The surviving account holders also need to submit TRF, death certificate, and client master report.

3. If There was a Single Owner and No Nominee Exists

Apart from the Transmission Request Form (TRF) and death certificate (with QR-code enabled death certificates now officially accepted to streamline verification), the following documents must be submitted:

• Letter of Indemnity: A legal declaration executed on non-judicial stamp paper of appropriate value and notarised, indemnifying the DP against any future claims.
• Requirement standardisation: Instead of multiple separate documents, a single standardised affidavit-cum-NOC is now used to state that the applicant is the legal heir and that other heirs have no objection to the securities being transmitted to the applicant (or alternatively, a copy of the Family Settlement Deed can be provided).
• Succession certificate: Either a succession certificate, a will, or a letter of administration issued by a competent court must be given to the DP (for claims exceeding the simplified threshold limits).

For Demat Accounts (Holdings up to ₹30 Lakh): Explains that no succession certificate or probate is required for uncontested claims up to the ₹30 lakh limit. Instead, simplified documentation applies (Transmission Request Form, QR-code enabled death certificate, Client Master Report, and a single standardised affidavit-cum-NOC).

For Physical Share Certificates (Holdings up to ₹10 Lakh): Separated distinctly to resolve the historical inconsistency, clarifying the ₹10 lakh limit for physical shares handled via the Registrar and Transfer Agent (RTA).

Step-by-Step Process for Transmission of Securities After Demat Account Holder’s Death

1. Step 1: Identify the DP
   Check which Depository Participant the deceased decided to open a Demat account with.
2. Step 2: Download the Transmission Request Form
   The TRF is available on the DP's website or at their service center. Fill in the deceased's details, the claimant's details, and the securities to be transmitted.
3. Step 3: Submit the required documents
   Depending on whether a nominee exists and the type of account, compile the relevant documents and submit them to the DP.
4. Step 4: DP verification
   The DP will verify the details. It could request additional documents if required. After the process is over, the DP will transfer the securities from the deceased's account to the claimant's Demat account.

Note: The nominee must have their own Demat account. If they don't have one, they have to open one before the transmission can be completed.

What is Quick Transmission Processing (QTP)?

It is equally important to understand the role of Quick Transmission Processing (QTP) in the whole securities transfer process.

For smaller estates, SEBI has introduced a fast-track lane. If the security value is up to ₹30,000 (Demat) or ₹10,000 (Physical), transmission is processed with minimal documentation, significantly reducing turnaround time.

• Eligibility: QTP applies to low-value claims up to ₹30,000 for dematerialised holdings and ₹10,000 for physical securities.
• Who can claim: This fast-track lane is restricted exclusively to immediate family members (spouses, parents, children, and parents-in-law).
• Minimal documentation: Claimants can bypass the extensive multi-document verification process required for larger estates. Processing entities accept a streamlined set of requirements, typically a basic Transmission Request Form (TRF), a verifiable death certificate (including QR-code variants), proof of identity, and a basic undertaking or simplified declaration.
• Relationship verification: If an immediate relative cannot furnish standard relationship proofs (such as a birth or marriage certificate), a notarised affidavit confirming the relationship is officially accepted.

How to Transmit Physical Share Certificates After Death of Demat Account Holder?

• With a nominee: The nominee must submit the TRF and death certificate to the company's Registrar and Transfer Agent (RTA).
• Without a nominee and value of holdings up to ₹10 lakh: Documentation such as a single affidavit-cum-NOC and indemnity bond is accepted.
• Without a nominee and value of holdings above ₹10 lakh: If the claim is uncontested, certificate or probate is no longer automatically mandatory. Transmission can proceed via a will, indemnity, and standardised documentation.

Note: A court-issued succession certificate, probate, or letter of administration remains mandatory if there are rival claims or disputes among the legal heirs.

Taxes on Transmission of Securities After Death of Demat Account Holder

1. No tax on transfer:
   Transmission is not sale: Moving shares from the deceased person's account to a nominee or legal heir is classified as a transmission, not a market trade.
2. Zero immediate tax:
   You do not pay any capital gains tax or income tax the moment the shares land in your Demat account.
3. Tax Applies Only When You sell:
   If the nominee or legal heir eventually sells the inherited shares in the open market, capital gains tax will apply at that point.
4. How Capital Gains are Calculated:
   When you do decide to sell the inherited shares, the tax authorities look at two crucial factors:
   • The original purchase price: Your "cost of acquisition" is not the price of the stock on the day the person passed away. It is the original price the deceased person paid when they bought it.
   • The total holding period: To figure out if your profits are Short-Term (STCG) or Long-Term (LTCG), add together the time the original investor held the stock plus the time you held it. If the combined period crosses the threshold (e.g., more than 12 months for listed equities), it qualifies for lower long-term capital gains tax rates.
5. How Dividends are Calculated:
   If the company pays dividends after the shares have been transferred to your name, that dividend income is taxable in your hands according to your individual income tax slab rates.

Timeframe for Transmission of Securities After Death of Demat Account Holder

Under the new SEBI framework (effective August 22, 2026), the processing timeline for transmission of securities has been standardised to a single limit for both physical and dematerialised securities.

For Demat accounts with complete documentation, the process is completed within 21 days. There is no longer a separate 7-day vs 21-day distinction.

If there is no nominee, legal papers are necessary, like a succession certificate, the process may take more time. Delays are minimised through timely and correct documentation.

Important Points to Consider for Transmission of Securities

• Appointing a nominee is essential for easy transmission of securities to an account holder’s family or legal heirs.
• If there is any delay in the transmission of securities, the nominees can contact the DP.
• Securities are not transmitted automatically. The process must be initiated by the nominees at the earliest.
• The shares in the deceased’s Demat account will remain frozen until the transmission process is initiated.

Conclusion

It is important to know how to transfer shares from one Demat account to another after the death of the account holder. The process is easier in the case of joint accounts or where the account holder has appointed a nominee. Appointing a nominee helps in estate planning and clarifies who will inherit the assets contained in the Demat account.